(Convenience Translation into English from the Original Previously Issued in Portuguese)
Biosev S.A.
Individual and Consolidated
Interim Financial Statements
For the Three-month Period Ended
June 30, 2020
Interim Financial Statements | ||
June 30, 2020 | ||
CONTENTS | ||
REVIEW REPORT OF INDEPENDENT AUDITOR'S ................................................................................. | 04 | |
BALANCE SHEET ....................................................................................................................................... | 06 | |
STATEMENT OF OPERATIONS ................................................................................................................. | 07 | |
STATEMENT OF COMPREHENSIVE INCOME (LOSS) ............................................................................ | 08 | |
STATEMENT OF CHANGES IN EQUITY .................................................................................................... | 09 | |
STATEMENT OF CASH FLOWS ................................................................................................................. | 10 | |
STATEMENT OF VALUE ADDED ............................................................................................................... | 11 | |
NOTES | ||
SHORT- AND LONG-TERM INVESTMENTS........................................................................................... | ||
CURRENT AND DEFERRED INCOME TAX AND SOCIAL CONTRIBUTION ......................................... | ||
PROVISION FOR TAX, LABOR, CIVIL AND ENVIRONMENTAL CONTINGENCIES ............................. | ||
(Convenience Translation into English from the Original Previously Issued in Portuguese)
INDEPENDENT AUDITOR'S REVIEW REPORT ON THE INTERIM FINANCIAL INFORMATION
To the
Board of Directors and Shareholders
Biosev S.A.
São Paulo - SP
Introduction
We have reviewed the accompanying individual and consolidated interim financial information of Biosev S.A. ("Company"), contained in the Quarterly Information Form - ITR for the quarter ended June 30, 2020, which comprises the statement of financial position as of June 30, 2020, and the respective statements of profit or loss, other comprehensive income, changes in equity and cash flows for the three-month period then ended, including the explanatory notes.
The Company´s management is responsible for the preparation of this individual and consolidated interim financial information in accordance with Technical Pronouncement CPC 21 (R1) - Interim Financial Reporting and IAS 34 - Interim Financial Reporting, issued by International Accounting Standards Board (IASB), as well for the presentation of this information in accordance with standards issued by the Brazilian Securities and Exchange Commission, applicable to the preparation of Quarterly Information - ITR. Our responsibility is to express a conclusion on this interim financial information based on our review.
Scope of review
We conducted our review in accordance with the Brazilian and International standards on review engagements of interim financial information (NBC TR 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim financial information consists of making inquiries, primarily of persons responsible for the financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the audit standards and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion on the interim financial information
Based on our review, nothing has come to our attention that causes us to believe that the accompanying individual and consolidated interim financial information included in the Quarterly Information referred to above has not been prepared, in all material respects, in accordance with Technical Pronouncement CPC 21 (R1) and IAS 34, issued by IASB, applicable to the preparation of Quarterly Information - ITR, and presented in accordance with standards issued by the Brazilian Securities and Exchange Commission.
Emphasis of matter
Transactions with related parties
The Company and its subsidiaries have carried out significant transactions with related parties of the Louis Dreyfus Company Group. The effects on results of these transactions and the corresponding assets and liabilities are disclosed in note 20. Our opinion is not modified with respect to this matter.
4
Other matters
Statements of Value Added
The quarterly information referred to above includes the individual and consolidated statements of value added for the three-month period ended June 30, 2020. These statements are the responsibility of the Company's management and are presented as supplementary information under IAS 34. These statements have been subjected to review procedures performed together with the review of the interim accounting information for the purpose of concluding whether they are reconciled with the interim accounting information and accounting records, as applicable, and if their form and content are in accordance with the criteria defined in the accounting standard CPC 09 - "Statement of Value Added". Based on our review, nothing has come to our attention that causes us to believe that these statements of value added have not been properly prepared, in all material respects, in accordance with the criteria established in this accounting standard, and consistent with the individual and consolidated interim accounting information taken as a whole.
The accompanying individual and consolidated interim financial information has been translated into English for the convenience of readers outside Brazil.
São Paulo, September 17, 2020.
BDO RCS Auditores Independentes SS
CRC 2 SP 013846/O-1
Francisco de Paula dos Reis Júnior
Accountant CRC 1 SP 139268/O-6
5
Biosev S.A.
(Convenience Translation into English from the Original Previously Issued in Portuguese) | - | - | - | - | ||||||||||||||||||||||||||||||||
BALANCE SHEET | ||||||||||||||||||||||||||||||||||||
AS AT JUNE 30, 2020 | ||||||||||||||||||||||||||||||||||||
(In thousands of Brazilian reais - R$) | ||||||||||||||||||||||||||||||||||||
Company | Consolidated | Company | Consolidated | |||||||||||||||||||||||||||||||||
ASSETS | Note | 06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | LIABILITIES AND EQUITY | Note | 06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | |||||||||||||||||||||||||
CURRENT ASSETS | CURRENT LIABILITIES | |||||||||||||||||||||||||||||||||||
Cash and cash equivalents | 3 | 114,802 | 396,124 | 359,383 | 1,174,943 | Borrow ings and financing | 16 | 421,054 | 2,935,559 | 1,168,611 | 7,225,234 | |||||||||||||||||||||||||
Short-term investments | 4 | 58,701 | 42,052 | 69,858 | 52,245 | Lease liabilities | 12 | 200,569 | 215,257 | 477,464 | 498,932 | |||||||||||||||||||||||||
Derivative financial instruments | 27 | 93,131 | 225,787 | 97,252 | 225,787 | Advances from domestic customers | 112,114 | 7,611 | 140,694 | 28,128 | ||||||||||||||||||||||||||
Trade receivables | 5 | 244,271 | 210,771 | 448,749 | 202,050 | Advances from foreign customers | 836,233 | 968,764 | 2,292,160 | 2,585,641 | ||||||||||||||||||||||||||
Inventories | 6 | 1,368,611 | 1,105,650 | 2,755,825 | 2,948,633 | Trade payables | 17 | 316,809 | 309,104 | 690,168 | 798,903 | |||||||||||||||||||||||||
Biological assets | 7 | 404,900 | 303,621 | 775,238 | 663,908 | Accrued payroll and related taxes | 56,607 | 47,218 | 110,115 | 90,483 | ||||||||||||||||||||||||||
Recoverable taxes | 8 | 66,001 | 50,274 | 153,299 | 158,777 | Taxes payable | 18 | 21,203 | 21,314 | 69,442 | 75,152 | |||||||||||||||||||||||||
Other receivables | 51,891 | 44,364 | 100,907 | 88,170 | Derivative financial instruments | 27 | 338,255 | 575,188 | 353,256 | 586,843 | ||||||||||||||||||||||||||
2,402,308 | 2,378,643 | 4,760,511 | 5,514,513 | Other payables | 68,228 | 80,594 | 114,509 | 118,051 | ||||||||||||||||||||||||||||
Assets held for sale | 10 | Total current liabilities | ||||||||||||||||||||||||||||||||||
37,777 | 45,165 | 37,777 | 45,165 | 2,371,072 | 5,160,609 | 5,416,419 | 12,007,367 | |||||||||||||||||||||||||||||
Total current assets | 2,440,085 | 2,423,808 | 4,798,288 | 5,559,678 | ||||||||||||||||||||||||||||||||
NON-CURRENT ASSETS | ||||||||||||||||||||||||||||||||||||
Long-term receivables | NON-CURRENT LIABILITIES | |||||||||||||||||||||||||||||||||||
Advances to suppliers | 35,723 | 34,719 | 59,136 | 56,602 | Borrow ings and financing | 16 | 2,750,257 | 67,484 | 6,593,297 | 96,191 | ||||||||||||||||||||||||||
Escrow deposits | 9 | 189,656 | 192,166 | 383,113 | 385,413 | Lease liabilities | 12 | 531,816 | 516,857 | 1,215,719 | 1,182,337 | |||||||||||||||||||||||||
Recoverable taxes | 8 | 10,784 | 11,502 | 82,003 | 57,529 | Advances from foreign customers | 20 | 845,311 | 802,505 | - | 626,116 | |||||||||||||||||||||||||
Derivative financial instruments | 27 | - | - | - | 55,885 | Trade payables | 17 | 4,622 | 5,733 | 4,857 | 5,965 | |||||||||||||||||||||||||
Deferred income tax and social contribution | 11.1 | 345,377 | 418,029 | 856,718 | 872,971 | Deferred income tax and social contribution | 11.1 | - | - | 36,383 | 36,883 | |||||||||||||||||||||||||
Other receivables | 306,082 | 335,939 | 319,104 | 320,012 | Derivative financial instruments | 27 | - | - | 17,563 | 16,596 | ||||||||||||||||||||||||||
Right to use the assets from lease operations | 12 | 700,329 | 700,306 | 1,588,562 | 1,577,379 | Provision for tax, labor, civil and enviromental contingencies | 19 | 112,810 | 108,081 | 308,175 | 294,668 | |||||||||||||||||||||||||
Investments | 13 | 1,264,952 | 1,240,462 | 157,457 | 160,393 | Taxes payable | 18 | 18,324 | 18,501 | 18,324 | 18,501 | |||||||||||||||||||||||||
Property, plant and equipment | 14 | 1,542,181 | 1,635,433 | 3,266,705 | 3,477,391 | Other payables | 65,195 | 86,047 | 135,643 | 167,247 | ||||||||||||||||||||||||||
Intangible assets | 15 | 10,456 | 11,856 | 920,138 | 921,964 | Provision for investment loss | 13 | 1,467,473 | 1,251,234 | - | - | |||||||||||||||||||||||||
Total non-current assets | 4,405,540 | 4,580,412 | 7,632,936 | 7,885,539 | Total non-current liabilities | 5,795,808 | 2,856,442 | 8,329,961 | 2,444,504 | |||||||||||||||||||||||||||
EQUITY | ||||||||||||||||||||||||||||||||||||
Capital | 21 | 6,077,674 | 6,077,674 | 6,077,674 | 6,077,674 | |||||||||||||||||||||||||||||||
Capital reserve | 21 | 1,353,937 | 1,353,937 | 1,353,937 | 1,353,937 | |||||||||||||||||||||||||||||||
Accumulated losses | (8,448,523) | (8,167,310) | (8,448,523) | (8,167,310) | ||||||||||||||||||||||||||||||||
Other comprehensive loss | (304,343) | (277,132) | (304,343) | (277,132) | ||||||||||||||||||||||||||||||||
Total equity attributable to the Company's ow ners | (1,321,255) | (1,012,831) | (1,321,255) | (1,012,831) | ||||||||||||||||||||||||||||||||
Non-controlling interests | - | - | 6,099 | 6,177 | ||||||||||||||||||||||||||||||||
Total equity | (1,321,255) | (1,012,831) | (1,315,156) | (1,006,654) | ||||||||||||||||||||||||||||||||
TOTAL ASSETS | 6,845,625 | 7,004,220 | 12,431,224 | 13,445,217 | TOTAL LIABILITIES AND EQUITY | 6,845,625 | 7,004,220 | 12,431,224 | 13,445,217 | |||||||||||||||||||||||||||
The accompanying notes are an integral part of these interim financial statements. | ||||||||||||||||||||||||||||||||||||
6 | ||||||||||||||||||||||||||||||||||||
Biosev S.A.
(Convenience Translation into English from the Original Previously Issued in Portuguese)
STATEMENT OF OPERATIONS
FOR THE THREE-MONTH PERIOD ENDED JUNE 30, 2020 (In thousands of Brazilian reais - R$)
Company | Consolidated | |||||||||||
Three-month period | Three-month period | |||||||||||
ended | ended | |||||||||||
Note | 06.30.20 | 06.30.19 | 06.30.20 | 06.30.19 | ||||||||
NET REVENUE | 22 | 935.830 | 1.002.036 | 2.669.626 | 1.718.364 | |||||||
Cost of sales and services | 22 and 23 | (676.028) | (837.691) | (2.258.454) | (1.487.628) | |||||||
GROSS PROFIT | 259.802 | 164.345 | 411.172 | 230.736 | ||||||||
OPERATING INCOME (EXPENSES) | (223.339) | (240.956) | (185.621) | (217.837) | ||||||||
General, administrative and selling expenses | 23 | (42.500) | (52.637) | (154.667) | (109.237) | |||||||
Equity in subsidiaries | 13 | (174.277) | (153.644) | (2.936) | (3.475) | |||||||
Other operating income | 25 | 6.348 | 3.497 | 8.414 | 8.409 | |||||||
Other operating expenses | 25 | (12.910) | (38.172) | (36.432) | (113.534) | |||||||
OPERATING INCOME (LOSS) BEFORE FINANCE INCOME (COSTS) | 36.463 | (76.611) | 225.551 | 12.899 | ||||||||
Finance income | 24 | 5.182 | 7.168 | 8.512 | 12.967 | |||||||
Finance costs | 24 | (83.382) | (74.789) | (160.221) | (149.531) | |||||||
Derivatives | 24 | 2.980 | 41.243 | 49.376 | 9.279 | |||||||
Exchange rate changes | 24 | (171.329) | 40.866 | (383.428) | 76.284 | |||||||
LOSS BEFORE TAXES | (210.086) | (62.123) | (260.210) | (38.102) | ||||||||
INCOME TAX AND SOCIAL CONTRIBUTION | 11.2 | (71.127) | (106.698) | (21.081) | (130.792) | |||||||
LOSS FOR THE PERIOD | (281.213) | (168.821) | (281.291) | (168.894) | ||||||||
Attributable to: | ||||||||||||
Company's ow ners | 26 | (281.213) | (168.821) | (281.213) | (168.821) | |||||||
Non-controlling interests | - | - | (78) | (73) | ||||||||
LOSS PER SHARE - R$ | ||||||||||||
Basic | 26 | (0,59327) | (0,43694) | (0,59327) | (0,43694) | |||||||
Diluted | 26 | (0,59327) | (0,43694) | (0,59327) | (0,43694) |
7
The accompanying notes are an integral part of these interim financial statements.
Biosev S.A.
(Convenience Translation into English from the Original Previously Issued in Portuguese)
STATEMENT OF COMPREHENSIVE INCOME (LOSS) FOR THE THREE-MONTH PERIOD ENDED JUNE 30, 2020 (In thousands of Brazilian reais - R$)
Company
Three-month period ended
Consolidated
Three-month period ended
Note | 06.30.20 | 06.30.19 | 06.30.20 | 06.30.19 | |||||
LOSS FOR THE YEAR | (281.213) | (168.821) | (281.291) | (168.894) | |||||
OTHER COMPREHENSIVE INCOME (LOSS) | |||||||||
Items subsequently reclassified to profit or loss: | |||||||||
Financial instruments - hedge accounting of futures | 27 | (48.611) | 20.778 | (48.611) | 20.778 | ||||
Financial instruments - hedge accounting of Libor sw ap | 27 | (934) | (6.205) | (934) | (6.205) | ||||
Financial instruments - hedge accounting of Non-Deliverable Forw ard (NDF) | 27 | (10.164) | (19.111) | (10.164) | (19.111) | ||||
Financial instruments - hedge accounting of exchange differences | 27 | 18.481 | 33.868 | 18.481 | 33.868 | ||||
Deferred income tax and social contribution related to components of other comprehensive income (loss) | 11.3 | 14.017 | (9.972) | 14.017 | (9.972) | ||||
(27.211) | 19.358 | (27.211) | 19.358 | ||||||
COMPREHENSIVE LOSS FOR THE PERIOD | (308.424) | (149.463) | (308.502) | (149.536) | |||||
Attributable to: | |||||||||
Company's ow ners | (308.424) | (149.463) | (308.424) | (149.463) | |||||
Non-controlling interests | - | - | (78) | (73) |
The accompanying notes are an integral part of these interim financial statements.
8
Biosev S.A.
(Convenience Translation into English from the Original Previously Issued in Portuguese)
STATEMENT OF CHANGES IN EQUITY
FOR THE THREE-MONTH PERIOD ENDED JUNE 30, 2020 (In thousands of Brazilian reais - R$)
Other | |||||||||||||||||||||||||||
Capital | comprehensive | Accumulated | Non-controlling | Total consolidated | |||||||||||||||||||||||
Capital | reserve | income (loss) | losses | Company's equity | interests | equity | |||||||||||||||||||||
BALANCES AS AT MARCH 31, 2019 | 6,077,674 | 1,353,937 | (287,906) | (6,617,139) | 526,566 | 6,280 | 532,846 | ||||||||||||||||||||
Loss for the period | - | - | - | (168,821) | (168,821) | (73) | (168,894) | ||||||||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||||||||||
Adjusted derivatives (hedge accounting), net of taxes | - | - | 19,358 | - | 19,358 | - | 19,358 | ||||||||||||||||||||
Comprehensive income (loss) for the period | - | - | 19,358 | (168,821) | (149,463) | (73) | (149,536) | ||||||||||||||||||||
BALANCES AS AT JUNE 30, 2019 | 6,077,674 | 1,353,937 | (268,548) | (6,785,960) | 377,103 | 6,207 | 383,310 | ||||||||||||||||||||
BALANCES AS AT MARCH 31, 2020 | 6,077,674 | 1,353,937 | (277,132) | (8,167,310) | (1,012,831) | 6,177 | (1,006,654) | ||||||||||||||||||||
Loss for the period | - | - | - | (281,213) | (281,213) | (78) | (281,291) | ||||||||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||||||||||
Adjusted derivatives (hedge accounting), net of taxes | - | - | (27,211) | - | (27,211) | - | (27,211) | ||||||||||||||||||||
Comprehensive loss for the period | - | - | (27,211) | (281,213) | (308,424) | (78) | (308,502) | ||||||||||||||||||||
BALANCES AS AT JUNE 30, 2020 | 6,077,674 | 1,353,937 | (304,343) | (8,448,523) | (1,321,255) | 6,099 | (1,315,156) | ||||||||||||||||||||
The accompanying notes are an integral part of these interim financial statements.
9
Biosev S.A.
(Convenience Translation into English from the Original Previously Issued in Portuguese)
STATEMENT OF CASH FLOWS
FOR THE THREE-MONTH PERIOD ENDED JUNE 30, 2020 (In thousands of Brazilian reais - R$)
Company
Three-month period ended
Consolidated
Three-month period ended
Note | 06.30.20 | 06.30.19 | 06.30.20 | 06.30.19 | ||||||
CASH FLOW FROM OPERATING ACTIVITIES | ||||||||||
Loss for the period | (281.213) | (168.821) | (281.291) | (168.894) | ||||||
Non-cash transactions: | - | - | - | - | ||||||
Depreciation and amortization | 23 | 220.965 | 236.092 | 453.749 | 436.155 | |||||
Income (loss) from sale of property, plant and equipment | 25 | 56 | (504) | (613) | (5.428) | |||||
Equity in subsidiaries | 13 | 174.277 | 153.644 | 2.936 | 3.475 | |||||
Interest, exchange rate changes and inflation adjustments, net | 213.162 | 23.711 | 488.385 | 56.974 | ||||||
Exchange, interest rate and commodities risk management | 160.966 | 164.187 | 135.302 | 174.662 | ||||||
Recognition of provision for tax, labor, civil and enviromental contingencies | 6.142 | 7.537 | 27.123 | 25.506 | ||||||
Recognition (reversal) of estimated losses on doubtful accounts | 5 | 7 | 389 | (231) | 590 | |||||
Income from sale of intangible asset | 15 | 141 | - | 251 | - | |||||
Reversal of impairment loss | 14 | (141) | (376) | (260) | (1.704) | |||||
Impairment of assets held for sale | 10 | (119) | 21.060 | (119) | 21.114 | |||||
Provision for other losses | 25 | 27 | 122 | 3.762 | 58.740 | |||||
Recognition (reversal) of allow ance for negative margin and | ||||||||||
realization of storeroom inventories | 6 | 10.382 | (2.278) | 14.139 | (1.433) | |||||
Losses (gains) on changes in fair value less estimated costs to sell biological assets | 22 and 23 | (177.049) | (71.508) | (213.829) | (93.397) | |||||
Deferred income tax and social contribution | 11.2 | 77.669 | 106.698 | 29.770 | 133.575 | |||||
Hedge operations | (32.228) | 17.145 | (41.228) | 29.330 | ||||||
Derecognition of operating leases | 3.568 | - | 7.468 | - | ||||||
376.612 | 487.098 | 625.314 | 669.265 | |||||||
Decrease (increase) in assets: | ||||||||||
Trade receivables | 5 | (33.026) | (54.593) | (245.789) | (171.847) | |||||
Inventories | 6 | (140.301) | (368.101) | 402.255 | (1.109.780) | |||||
Derivative financial instruments | 27 | 132.656 | (20.635) | 184.420 | (29.768) | |||||
Escrow deposits | 9 | 2.510 | (7.121) | 2.300 | (6.757) | |||||
Recoverable taxes | 8 | (15.009) | 7.613 | (18.996) | 4.321 | |||||
Advances to suppliers | (1.004) | (480) | (2.534) | (5.667) | ||||||
Other receivables | 22.303 | (25.579) | (15.591) | (4.412) | ||||||
(31.871) | (468.896) | 306.065 | (1.323.910) | |||||||
Increase (decrease) in liabilities: | ||||||||||
Trade payables | 17 | 6.672 | (61.352) | (109.713) | (106.401) | |||||
Advances from foreign customers | (89.725) | 292.211 | (919.597) | 812.072 | ||||||
Accrued payroll and related taxes | 9.389 | 3.525 | 19.632 | 5.861 | ||||||
Taxes payable | 18 | (288) | (6.402) | (5.887) | (23.743) | |||||
Advances from domestic customers | 104.503 | 5.098 | 112.566 | 3.792 | ||||||
Payments of labor, civil, tax and environmental contingencies | 19 | (1.413) | (1.523) | (13.616) | (5.484) | |||||
Derivative financial instruments | 27.1 | (397.899) | (300.134) | (367.922) | (304.709) | |||||
Other payables | (33.218) | (30.661) | (35.146) | (40.630) | ||||||
(401.979) | (99.238) | (1.319.683) | 340.758 | |||||||
Cash used in operating activities, net interest | (57.238) | (81.036) | (388.304) | (313.887) | ||||||
Interest on borrow ings and financing | (48.854) | (68.514) | (91.124) | (157.889) | ||||||
Cash used in operating activities | (106.092) | (149.550) | (479.428) | (471.776) | ||||||
CASH FLOW FROM INVESTING ACTIVITIES | ||||||||||
Decrease (increase) in short- and long-term investments | 4 | (16.577) | 18.743 | (17.484) | 67.830 | |||||
Decrease (increase) in investments (provision for investment loss) | 13 | 17.472 | (27.653) | - | - | |||||
Additions to lease agreements | 12 | (52.406) | (707.460) | (136.139) | (1.617.191) | |||||
Increase in property, plant and equipment | 14 | (59.204) | (37.147) | (117.123) | (95.124) | |||||
Additions to biological assets | 7 | (71.420) | (63.210) | (126.968) | (113.227) | |||||
Additions to intangible assets | 15 | (189) | (5.585) | (190) | (6.475) | |||||
Cash used in investing activities | (182.324) | (822.312) | (397.904) | (1.764.187) | ||||||
CASH FLOW FROM FINANCING ACTIVITIES | ||||||||||
Additions to lease operations | 12 | 52.487 | 707.460 | 136.170 | 1.617.191 | |||||
Payment of lease operations | 12 | (66.348) | (54.165) | (155.783) | (136.814) | |||||
Borrow ings and financing | 16 | 492.784 | 809.392 | 859.770 | 1.912.948 | |||||
Payment of borrow ings and financing | 16 | (471.829) | (862.904) | (778.384) | (1.921.867) | |||||
Cash provided by financing activities | 7.094 | 599.783 | 61.773 | 1.471.458 | ||||||
DECREASE IN CASH AND CASH EQUIVALENTS | (281.322) | (372.079) | (815.559) | (764.505) | ||||||
Cash and cash equivalents at the beginning of the period | 3 | 396.124 | 577.523 | 1.174.943 | 1.189.112 | |||||
Cash and cash equivalents at the end of the period | 3 | 114.802 | 205.444 | 359.384 | 424.607 | |||||
Non-cash items | ||||||||||
Transfer of depreciation and amortization to inventories | 109.089 | 46.774 | 219.442 | 163.524 | ||||||
Transfer of assets and liabilities to held for sale - Estivas plant | 7.506 | 21.060 | 7.506 | 17.609 | ||||||
Acquisition of financed property, plant and equipment | - | 22.241 | - | 49.205 | ||||||
The accompanying notes are an integral part of these interim financial statements. | 10 | |||||||||
Biosev S.A.
(Convenience Translation into English from the Original Previously Issued in Portuguese)
STATEMENT OF VALUE ADDED
FOR THE THREE-MONTH PERIOD ENDED JUNE 30, 2020 (In thousands of Brazilian reais - R$)
Company | Consolidated | ||||||||||||||||||
Three-month period | Three-month period | ||||||||||||||||||
ended | ended | ||||||||||||||||||
Note | 06.30.20 | 06.30.19 | 06.30.20 | 06.30.19 | |||||||||||||||
1 | - REVENUE | 965.225 | 1.062.551 | 2.736.124 | 1.852.699 | ||||||||||||||
1.1) | Sales | 22 | 958.884 | 1.059.443 | 2.727.479 | 1.844.880 | |||||||||||||
1.2) | Reversal of estimated losses on doubtful accounts | 25 | (7) | (389) | 231 | (590) | |||||||||||||
1.3) | Other operating income | 25 | 6.348 | 3.497 | 8.414 | 8.409 | |||||||||||||
2 | - INPUTS PURCHASED FROM THIRD PARTIES | (392.284) | (530.503) | (1.691.056) | (960.488) | ||||||||||||||
2.1) | Cost of sales and services | (13.251) | (45.471) | (229.979) | (248.810) | ||||||||||||||
2.2) | Materials, electric pow er, external services and other | (556.082) | (556.540) | (1.674.906) | (805.075) | ||||||||||||||
2.3) Gains on changes in fair value of biological assets and other | 177.049 | 71.508 | 213.829 | 93.397 | |||||||||||||||
3 | - GROSS VALUE ADDEED (1-2) | 572.941 | 532.048 | 1.045.068 | 892.211 | ||||||||||||||
4 | - DEPRECIATION AND AMORTIZATION | 23 | (220.965) | (236.092) | (453.749) | (436.155) | |||||||||||||
5 | - VALUE ADDED CREATED BY THE ENTITY (3-4) | 351.976 | 295.956 | 591.319 | 456.056 | ||||||||||||||
6 | - VALUE ADDED RECEIVED IN TRANSFER | (166.114) | (105.233) | 54.951 | 18.771 | ||||||||||||||
6.1) | Equity in subsidiaries | 13 | (174.277) | (153.644) | (2.936) | (3.475) | |||||||||||||
6.2) | Finance income | 8.163 | 48.411 | 57.887 | 22.246 | ||||||||||||||
7 | - VALUE ADDED FOR DISTRIBUTION (5+6) | 185.862 | 190.723 | 646.270 | 474.827 | ||||||||||||||
8 | - DISTRIBUTION OF VALUE ADDED | 185.862 | 190.723 | 646.270 | 474.827 | ||||||||||||||
8.1) | Personnel and payroll taxes | 23 | 53.592 | 88.229 | 145.899 | 153.445 | |||||||||||||
Direct compensation | 33.047 | 67.120 | 97.294 | 106.116 | |||||||||||||||
Benefits | 14.783 | 14.084 | 35.524 | 32.262 | |||||||||||||||
Severance pay fund (FGTS) | 5.762 | 7.025 | 13.081 | 15.067 | |||||||||||||||
8.2) | Taxes, rates and contributions | 99.063 | 163.552 | 85.088 | 257.232 | ||||||||||||||
Federal | 82.322 | 124.396 | 54.644 | 185.466 | |||||||||||||||
State | 16.724 | 39.154 | 30.419 | 71.752 | |||||||||||||||
Municipal | 17 | 2 | 25 | 14 | |||||||||||||||
8.3) | Third-party capital use | 314.420 | 107.763 | 696.574 | 233.044 | ||||||||||||||
Rentals | 59.708 | 73.840 | 152.926 | 159.797 | |||||||||||||||
Interest and exchange rate changes | 254.712 | 33.923 | 543.648 | 73.247 | |||||||||||||||
8.4) | Equity capital | (281.213) | (168.821) | (281.291) | (168.894) | ||||||||||||||
Loss for the period | (281.213) | (168.821) | (281.291) | (168.894) | |||||||||||||||
The accompanying notes are an integral part of these interim financial statements. |
11
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
1. GENERAL INFORMATION
Biosev S.A. ("Company"), a publicly-held company headquartered at Avenida Brigadeiro Faria Lima, 1355, 11º andar, Pinheiros, São Paulo, SP, and its subsidiaries (hereinafter referred to as, collectively, "Group") are mainly engaged in the production, processing and sale of agricultural products, primarily sugarcane and its by-products; the agricultural operations in Company-owned or third-party land; the export, import and sale of petroleum by-products, lubricants, fuel, grease and hydrated ethyl alcohol; the purchase, sale, import and export of agricultural products and its by-products; and the generation and sale of electricity and its by-products.
The Group comprises the activities of Biosev S.A. and Biosev Bioenergia S.A. ("Biosev Bioenergia"), based in Brazil, and Biosev Bioenergia International S.A. ("Biosev Bioenergia International"), based in Switzerland. Additionally, the Group consists of the subsidiaries of such companies, including Biosev Comercializadora S.A., a special-purpose entity established to sell ethanol by-products, sugar and electric power arising from the cogeneration assets of the Santa Elisa and Passa Tempo units, located in the State of São Paulo and State of Mato Grosso do Sul, respectively.
The Group is organized in industrial clusters, composed as follows, with their corresponding branches:
- North Ribeirão Preto Agri-Industrial Cluster: Continental (located in the State of São Paulo) and Lagoa da Prata (located in the State of Minas Gerais) plants;
- South Ribeirão Preto Agri-Industrial Cluster: Santa Elisa, Leme, Vale do Rosário and MB (Morro Agudo) (located in the State of São Paulo) plants;
- Mato Grosso do Sul Agri-Industrial Cluster: Passa Tempo and Rio Brilhante (located in the State of Mato Grosso do Sul) plants.
Biosev S.A. is a company of the Louis Dreyfus Company Group, directly controlled by Hédera Investimentos e Participações Ltda., which holds 79.43% of its shares.
The Company's Management had adopted measures to adjust the debt profile. Specifically, the Company has maintained its strategy to maximize the use of its assets, aligned with strict financial discipline, in order to increase the operational efficiency and the generation of positive free cash flow.
The Company has recorded net losses in the year ended June 30, 2020, mainly by virtue of the negative foreign exchange effects on foreign currency-denominated debts. The Company recorded net losses of R$281,213 as at June 30, 2020. The Company's capacity to continue as a going concern depends on the obtaining of additional capital, renewal and extension of the credit facilities and, finally, generation of profitable transactions. Specifically, the Company's and its subsidiaries' debt levels may significantly impact the business, inclusive in relation to working capital financing and recurring capital disbursements, taking into account the necessary funds to pay the debt service. In addition, out of R$2,292,160, in Consolidated, recorded in current liabilities, in line item "Advances from foreign customers", R$1,732,798 refers to advances to commodities export performance operations with related parties. Moreover, the amount of R$1,743,998, in Consolidated, was recorded in current assets, in line item "Inventories - advances to related-party suppliers". For further information, see Note 20.
Although there is no guarantee that the Company will be able to generate sufficient cash flow to finance the transactions and pay its debt, Management continues to implement actions to improve the operational activities and reduce costs and expenses, in addition to the negotiations in progress with the financial institutions that historically have supported the Company's activities. The Company's Management expects that the improvement actions, current cash balances, favorable liquidity developments and available credit facilities, and results from operations are sufficient to meet the working capital, capital expenses, debt service and other needs for the next year.
Should the Company is not able to generate sufficient cash to conduct the transactions in progress, the Company may need to seek for additional debt financing. The Company may fully or partially refinance its debt, which may be more costly, in addition to all other impacts.
12
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Covid-19 effects
In connection with the financial statements as at March 31, 2020, the Company continues to comply with all guidelines to prevent Covid-19 disclosed by the proper health bodies and maintain the measures to mitigate the risk of transmission of Covid-19 in work places.
Although the pandemic has not been fully eradicated, the Brazilian authorities began to loosen the restrictions, and the Company believes that the pandemic effects in the global economy has begun to be mitigated. As of the date, the Company has not identified significant effects on its operations; therefore, the Company has maintained the estimated production, sales and delivery of products. The agro industrial sector is deemed an essential activity by virtue of the essential supplies produced to the population, relating to the meal and transportation segments. In addition, there was no change in the measurement of the economic and financial impacts from Covid-19, as disclosed in the financial statements as at March 31, 2020.
2. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES
2.1 Statement of compliance and basis of preparation
The individual and consolidated interim financial statements have been prepared and is presented in accordance with CPC 21 (R1) - Interim Financial Reporting and IAS 34 - Interim Financial Reporting issued by the International Accounting Standards Board (IASB).
These interim financial statements are presented in accordance with the standards issued by the Brazilian Securities and Exchange Commission (CVM), applicable to the preparation of Interim Financial Information (ITR).
The preparation of the individual and consolidated interim financial statements under CPC 21 (R1) and IAS 34 requires the use of certain critical accounting estimates by the Company's Management. The interim financial statements have been prepared based on the historical cost, except for certain financial instruments, held-for-sale assets and biological assets measured at their fair values. The historical cost is generally based on the fair value of the consideration paid in exchange for assets on the transaction date.
Management undertakes that all relevant information related to the interim financial statements, and only such information, is being highlighted and corresponds to the information used by Management in its management.
The accounting practices and methods of calculating estimates adopted in the interim accounting information are the same as those applied in the preparation of the annual financial statements for the year ended March 31, 2020, filed with the CVM, and therefore should be read together.
2.1.1 New standards, changes and interpretations of standards
CPC 06 (R2)/IFRS 16 - Leases
The aforementioned pronouncement was changed as a result of the granting of benefits related to COVID-19 to tenants under lease agreements. The Company analyzed the content of this pronouncement and did not identify any impacts, since the clauses of the current lease agreements remain unchanged.
13
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
3. CASH AND CASH EQUIVALENTS
CompanyConsolidated
06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | |||||||||||||
Cash and banks | 28,607 | 21,625 | 207,083 | 364,024 | ||||||||||||
Short-term investments | 41,288 | 3,004 | 70,792 | 41,792 | ||||||||||||
Debentures | 44,907 | 371,495 | 81,508 | 769,127 | ||||||||||||
114,802 | 396,124 | 359,383 | 1,174,943 | |||||||||||||
Short- and long-term investments refer to floating rate Certificates of Bank Deposit (CDBs) and/or CDBs indexed at rates ranging from 95% to 96% of the Interbank Deposit Rate (CDI) as at June 30, 2020 (95% to 96% as at March 31, 2020). The CDBs investments are subject to repurchase commitments by the financial institutions issuers and/or custodians.
Debentures not subject to Tax on Financial Transactions (IOF) are issued from local prime financial institutions indexed at rates ranging from 70% to 75% of the CDI rate as at June 30, 2020 (73% to 80% as at March 31, 2020).
4. SHORT- AND LONG-TERM INVESTMENTS
Company | Consolidated | |||||||||||||||
06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | |||||||||||||
Short-term investments | 58,701 | 42,052 | 69,858 | 52,245 | ||||||||||||
58,701 | 42,052 | 69,858 | 52,245 | |||||||||||||
Short- and long-term investments refer to restricted deposits and are operations represented by (i) floating rate Certificates of Bank Deposit (CDBs) and/or CDBs indexed at rates ranging from 70% to 96% of the Interbank Deposit Rate (CDI) as at June 30, 2020 (95% to 96% as at March 31, 2020); (ii) margin deposits in derivative transactions; and (iii) foreign currency- denominated deposits related to prepayments of exports indexed at average rate of 0.10% p.a. performed by subsidiary Biosev Bioenergia Internacional S.A. These deposits may be considered, together with future agricultural production and sugar and ethanol inventories, for purposes of calculation of the indices set forth in the prepaid export agreements.
5. TRADE RECEIVABLES
Company | Consolidated | ||||||
06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | ||||
Related parties (Note 20) | |||||||
In Brazil | 12,131 | 7,498 | 557 | - | |||
Abroad | 180,902 | 133,503 | 219,167 | 2,505 | |||
193,033 | 141,001 | 219,724 | 2,505 | ||||
Third parties | |||||||
In Brazil | 45,858 | 67,955 | 109,446 | 191,167 | |||
Abroad | 6,153 | 2,581 | 133,540 | 22,570 | |||
52,011 | 70,536 | 242,986 | 213,737 | ||||
245,044 | 211,537 | 462,710 | 216,242 | ||||
(-) Estimated loss for doubtful accounts | (773) | (766) | (13,961) | (14,192) | |||
244,271 | 210,771 | 448,749 | 202,050 | ||||
14
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
The aging list of overdue receivables is as follows:
Company | Consolidated | ||||||
06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | ||||
Overdue | |||||||
Up to 30 days | 33,991 | 24,648 | 108,765 | 3,457 | |||
31 to 60 days | 24,982 | 2,083 | 687 | 6,462 | |||
61 to 90 days | 1,565 | 20,887 | 784 | 452 | |||
91 to 180 days | 435 | 20,455 | 742 | 325 | |||
Over 180 days | 735 | 17,001 | 16,186 | 16,874 | |||
61,708 | 85,074 | 127,164 | 27,570 | ||||
The change in the estimated loss for doubtful accounts is as follows:
At the beginning of the period/year
Reversal (recognition) of estimated loss for doubtful accounts
CompanyConsolidated
06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | |||||||||||
(766) | (175) | (14,192) | (13,395) | |||||||||||
(7) | (591) | 231 | (797) | |||||||||||
(773) | (766) | (13,961) | (14,192) | ||||||||||||||||||||
6. | INVENTORIES | ||||||||||||||||||||||
Company | Consolidated | ||||||||||||||||||||||
06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | ||||||||||||||||||||
Finished products | |||||||||||||||||||||||
Sugar | 113,666 | 4,218 | 303,235 | 14,838 | |||||||||||||||||||
Ethanol | 207,851 | 20,676 | 448,646 | 79,839 | |||||||||||||||||||
Sugar syrup | 1,313 | 317 | 2,117 | 1,241 | |||||||||||||||||||
Other | 70 | 247 | 258 | 331 | |||||||||||||||||||
Allow ance for negative inventory margin | (13,767) | (3,298) | (29,833) | (18,985) | |||||||||||||||||||
309,133 | 22,160 | 724,423 | 77,264 | ||||||||||||||||||||
Raw materials and packaging materials | 560 | 1,033 | 624 | 1,166 | |||||||||||||||||||
Storeroom supplies | 53,130 | 37,492 | 105,961 | 76,476 | |||||||||||||||||||
Allow ance for realization of storeroom inventories | (4,032) | (4,119) | (10,388) | (7,097) | |||||||||||||||||||
Advances to suppliers (*) | 1,009,820 | 1,049,084 | 1,935,205 | 2,800,824 | |||||||||||||||||||
1,059,478 | 1,083,490 | 2,031,402 | 2,871,369 | ||||||||||||||||||||
1,368,611 | 1,105,650 | 2,755,825 | 2,948,633 | ||||||||||||||||||||
- Out of the total amount as at June 30, 2020, R$88.469, in Company, and R$191,207 in Consolidated (R$105.192 and R$223,699 as at March 31, 2020, respectively), refer to advances to sugarcane suppliers that are adjusted on a monthly basis according to the specific conditions and indices set forth in the agreements, and R$921,351, in Company, and R$1,743,998 in Consolidated (R$943,892, in Company, and R$2.577.125, in Consolidated, as at March 31, 2020), refer to advances to export of commodities, as described in Note 20.
15
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
The changes in the allowance for negative inventory margin and realization of storeroom inventories are broken down as follows:
Company | Consolidated | |||||||||||||||
06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | |||||||||||||
Negative inventory margin | ||||||||||||||||
Opening balance | (3,298) | (7,410) | (18,985) | (25,793) | ||||||||||||
Additions | (13,767) | (3,298) | (29,833) | (18,985) | ||||||||||||
Reversals | 3,298 | 7,410 | 18,985 | 25,793 | ||||||||||||
(13,767) | (3,298) | (29,833) | (18,985) | |||||||||||||
Realization of storeroom inventories | ||||||||||||||||
Opening balance | (4,119) | (3,568) | (7,097) | (5,818) | ||||||||||||
Additions | (4,032) | (4,119) | (10,388) | (7,097) | ||||||||||||
Reversals | 4,119 | 3,568 | 7,097 | 5,818 | ||||||||||||
(4,032) | (4,119) | (10,388) | (7,097) | |||||||||||||
The allowance for negative inventory margin is calculated by analyzing the average production cost of finished products as compared to their realizable value in the market, less costs to sell.
The allowance for realization of storeroom inventories, considering obsolete and slow-moving items, is recognized on a quarterly basis based on inventory management procedure of storeroom inventories duly approved by the Company.
7. BIOLOGICAL ASSETS
Opening balance
Increases arising from expenses on sugarcane crops and crop treatments
CompanyConsolidated
06.30.20 03.31.20 06.30.20 03.31.20
303,621 | 264,480 | 663,908 | 501,124 | ||||
145,533 | 430,597 | 334,089 | 911,744 | ||||
449,154 | 695,077 | 997,997 | 1,412,868 | ||||
Gains (losses) on changes in fair value less estimated costs to sell | 177,049 | 120,821 | 213,829 | 222,448 | |||||
Transfer to assets held for sale | 478 | (13,682) | 478 | (13,682) | |||||
Sugarcane harvest at fair value in the year/period | (221,781) | (490,374) | (436,020) | (945,620) | |||||
Write-off | - | (8,221) | (1,046) | (12,106) | |||||
404,900 | 303,621 | 775,238 | 663,908 | ||||||
The following assumptions were used to determine the fair value:
Company | Consolidated | |||||||
06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | |||||
Estimated harvest area (in hectares) | 127.949 | 123.816 | 227.512 | 222.421 | ||||
Expected yields (in ton of sugarcane per hectare) | 87,50 | 85,88 | 89,80 | 89,07 | ||||
Total volume of recoverable sugar (in kilogram per ton of sugarcane) | 129,66 | 126,29 | 132,07 | 129,90 | ||||
Value of a kilogram of total recoverable sugar (in R$) - CONSECANA | 0,68 | 0,66 | 0,68 | 0,66 | ||||
Discount rate | 10,21% | 10,21% | 10,21% | 10,21% |
As at June 30, 2020, the Company provided as guarantee for the export prepayment 158,608 hectares (158,608 hectares as at March 31, 2020), equivalent to approximately 14,243,087 tons of sugarcane (14,127,348 as at March 31, 2020), at fair value of R$540,451 (R$473,432 as at March 31, 2020). Such prepayment falls due between March 2023 and April 2023.
16
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
8. | RECOVERABLE TAXES | ||||||||
Company | Consolidated | ||||||||
06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | ||||||
State VAT (ICMS) | 38,970 | 39,859 | 59,283 | 60,952 | |||||
Taxes on revenue (PIS and COFINS) (a) | 25,081 | 16,166 | 85,984 | 75,050 | |||||
Witholding Income Tax (IRRF) on short-term investments and | 9,929 | 2,978 | 65,258 | 55,466 | |||||
prepayments | |||||||||
Tax on manufactured products (IPI) and other taxes | 2,805 | 2,773 | 24,777 | 24,838 | |||||
76,785 | 61,776 | 235,302 | 216,306 | ||||||
Current assets | 66,001 | 50,274 | 153,299 | 158,777 | |||||
Non-current assets | 10,784 | 11,502 | 82,003 | 57,529 | |||||
- Refers to taxes on revenues (PIS and COFINS) relating to: (i) Law 10637/02; (ii) Law 10833/03; (iii) Law 11774/200; and (iv) Law 13043/14.
9. | ESCROW DEPOSITS | ||||||||||||||||
Company | Consolidated | ||||||||||||||||
06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | ||||||||||||||
Civil | 3,490 | 3,500 | 7,770 | 7,365 | |||||||||||||
Environmental | 2,199 | 2,442 | 7,290 | 7,548 | |||||||||||||
5,689 | 5,942 | 15,060 | 14,913 | ||||||||||||||
Tax | |||||||||||||||||
Tax on manufactured products (IPI) | - | - | 18,704 | 18,673 | |||||||||||||
Income tax (IRPJ) and social contribution (CSLL) | 16,273 | 16,235 | 33,311 | 33,262 | |||||||||||||
ICMS, PIS and COFINS | 9,818 | 9,758 | 46,025 | 46,344 | |||||||||||||
Social security contributions | 21,843 | 21,738 | 27,546 | 27,419 | |||||||||||||
Other | - | - | 3,026 | 3,054 | |||||||||||||
47,934 | 47,731 | 128,612 | 128,752 | ||||||||||||||
Tax | |||||||||||||||||
Labor appeals | 136,033 | 138,493 | 239,441 | 241,748 | |||||||||||||
136,033 | 138,493 | 239,441 | 241,748 | ||||||||||||||
189,656 | 192,166 | 383,113 | 385,413 | ||||||||||||||
The changes in the Company's escrow deposits are as follows:
Company | Consolidated | |||||||||||||||
06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | |||||||||||||
Opening balance | 192,166 | 210,108 | 385,413 | 367,388 | ||||||||||||
Additions | 3,547 | 31,563 | 5,700 | 81,534 | ||||||||||||
Offsets/redemptions | (6,057) | (49,505) | (8,000) | (63,509) | ||||||||||||
189,656 | 192,166 | 383,113 | 385,413 | |||||||||||||
17
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
10. ASSETS AND LIABILITIES HELD FOR SALE
Company and Consolidated
06.30.20 | 03.31.20 | |||||||
Assets held for sale | 37,777 | 45,165 | ||||||
37,777 | 45,165 | |||||||
The breakdown of assets and liabilities classified as held for sale is as follows:
Maracaju | ||||||||||||||||
Company and Consolidated | Note | plant | 06.30.20 | 03.31.20 | ||||||||||||
Assets | ||||||||||||||||
Biological assets | 7 | 426 | 426 | 904 | ||||||||||||
Fixed assets | 14 | 112,086 | 112,086 | 119,114 | ||||||||||||
Impairment losses | 14 | (74,735) | (74,735) | (74,853) | ||||||||||||
Total assets | 37,777 | 37,777 | 45,165 | |||||||||||||
11. CURRENT AND DEFERRED INCOME TAX AND SOCIAL CONTRIBUTION
11.1 Deferred income tax and social contribution assets and liabilities disclosed in balance sheet
Company | Consolidated | ||||||
06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | ||||
Deferred income tax and social contribution assets | 345,377 | 418,029 | 856,718 | 872,971 | |||
Deferred income tax and social contribution liabilities | - | - | (36,383) | (36,883) | |||
345,377 | 418,029 | 820,335 | 836,088 | ||||
11.2 Income tax and social contribution recognized in profit or loss for the period
Results from current income tax and social contribution
Results from deferred income tax and social contribution related to the origin and reversal of temporary differences and tax loss carryforw ards
CompanyConsolidated
06.30.20 | 06.30.19 | 06.30.20 | 06.30.19 | |||||
6,542 | - | 8,689 | 2,783 | |||||
(77,669) | (106,698) | (29,770) | (133,575) | |||||
(71,127) | (106,698) | (21,081) | (130,792) | |||||
11.3 Income tax and social contribution recognized in other comprehensive income (loss)
Results from deferred income tax and social contribution recognized in other comprehensive income (loss):
Financial instruments - hedge accounting of futures
Financial instruments - hedge accounting of Sw ap Libor
Financial instruments - hedge accounting of Non-Deliverable Forw ard (NDF) Financial instruments - hedge accounting of exchange differences
CompanyConsolidated
06.30.20 | 06.30.19 | 06.30.20 | 06.30.19 | |||||
4,146 | (722) | 16,528 | (7,065) | |||||
- | - | 317 | 2,110 | |||||
871 | 2,935 | 3,456 | 6,498 | |||||
- | - | (6,284) | (11,515) | |||||
5,017 | 2,213 | 14,017 | (9,972) | |||||||||
Effects on subsidiaries | 9,000 | (12,185) | - | - | ||||||||
14,017 | (9,972) | 14,017 | (9,972) | |||||||||
18
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
11.4 Reconciliation of income tax and social contribution expenses at statutory and effective rates
Company | Consolidated | |||||||||||||||
06.30.20 | 06.30.19 | 06.30.20 | 06.30.19 | |||||||||||||
Results before taxation | (210.086) | (62.123) | (260.210) | (38.102) | ||||||||||||
Statutory rate | 34% | 34% | 34% | 34% | ||||||||||||
Income from income tax and social contribution at statutory rate | 71.429 | 21.122 | 88.471 | 12.955 | ||||||||||||
Equity in subsidiaries | (59.254) | (52.239) | (998) | (1.182) | ||||||||||||
Unrecognized deferred income tax and social contribution credits | (76.031) | (76.751) | (104.180) | (135.669) | ||||||||||||
Tax revenue (grants) | 4.422 | 9.124 | 4.422 | 9.124 | ||||||||||||
Rate difference of foreign subsidiary | - | - | 6.088 | 97 | ||||||||||||
Subcapitalization rules | (7.750) | (5.739) | (14.326) | (15.208) | ||||||||||||
Other | (3.943) | (2.215) | (558) | (909) | ||||||||||||
Income from income tax and social contribution at effective rate | (71.127) | (106.698) | (21.081) | (130.792) | ||||||||||||
11.5 Balances of deferred income tax and social contribution assets and liabilities
Recognized in | Recognized in other | Closing | ||||||||||||||
Opening balance | profit or loss for | comprehensive | balance as at | |||||||||||||
Company | as at 03.31.20 | the period | income (loss) | 06.30.20 | ||||||||||||
Temporary differences: | ||||||||||||||||
Provision for tax, labor, civil and environmental contingencies | 37,028 | 1,608 | - | 38,636 | ||||||||||||
Adjustment at fair value of biological assets | (16,585) | (52,306) | - | (68,891) | ||||||||||||
Other receivables (AVP) | 14,162 | (914) | 13,248 | |||||||||||||
Hedge accounting of Libor sw ap, NDF and exchange rate changes | 63,527 | 14,967 | 5,017 | 83,511 | ||||||||||||
Unrealized exchange rate changes | 412,077 | 30,438 | - | 442,515 | ||||||||||||
Amortization of tax goodw ill | (245,277) | - | - | (245,277) | ||||||||||||
Accelerated depreciation | (39,048) | (11,144) | (50,192) | |||||||||||||
Impairment of fixed assets | 65,310 | (88) | - | 65,222 | ||||||||||||
Mark-to-market of derivatives | 2,363 | (55,618) | - | (53,255) | ||||||||||||
Impairment of assets held for sales | 10,859 | 40 | 10,899 | |||||||||||||
Other | 11,661 | (4,652) | - | 7,009 | ||||||||||||
316,077 | (77,669) | 5,017 | 243,425 | |||||||||||||
Unutilized tax losses and credits | ||||||||||||||||
Tax loss carryforw ards | 74,616 | - | - | 74,616 | ||||||||||||
Social contribution tax loss carryforw ards | 27,336 | - | - | 27,336 | ||||||||||||
418,029 | (77,669) | 5,017 | 345,377 | |||||||||||||
19
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Recognized in | Recognized in other | Closing | ||||||||
Opening balance | profit or loss for | comprehensive | balance as at | |||||||
Company | as at 03.31.19 | the period | income (loss) | 06.30.19 | ||||||
Temporary differences: | ||||||||||
Provision for tax, labor, civil and environmental contingencies | 47,227 | 2,045 | - | 49,272 | ||||||
Adjustment at fair value of biological assets | (15,389) | (18,165) | - | (33,554) | ||||||
Other receivables (AVP) | 1,795 | (139) | - | 1,656 | ||||||
Hedge accounting of Libor sw ap, NDF and exchange rate changes | 7,817 | 3,111 | 2,213 | 13,141 | ||||||
Unrealized exchange rate changes | 209,867 | (36,712) | - | 173,155 | ||||||
Amortization of tax goodw ill | (245,277) | - | - | (245,277) | ||||||
Accelerated depreciation | (25,179) | (8,522) | - | (33,701) | ||||||
Impairment | 65,746 | (59) | - | 65,687 | ||||||
Mark-to-market of derivatives | (16,095) | (52,561) | - | (68,656) | ||||||
Impairment of assets held for sales | 18,003 | 7,160 | - | 25,163 | ||||||
Other | 26,074 | (2,856) | - | 23,218 | ||||||
74,589 | (106,698) | 2,213 | (29,896) | |||||||
Unutilized tax losses and credits | ||||||||||
Tax loss carryforw ards | 74,616 | - | - | 74,616 | ||||||
Social contribution tax loss carryforw ards | 27,336 | - | - | 27,336 | ||||||
176,541 | (106,698) | 2,213 | 72,056 | |||||||
Recognized in | Recognized in other | Closing | ||||||||
Opening balance | profit or loss for | comprehensive | balance as at | |||||||
Consolidated | as at 03.31.20 | the period | income (loss) | 06.30.20 | ||||||
Temporary differences: | ||||||||||
Provision for tax, labor, civil and environmental contingencies | 100,468 | 4,592 | - | 105,060 | ||||||
Adjustment at fair value of biological assets | (71,630) | (67,396) | - | (139,026) | ||||||
Other receivables (AVP) | 14,162 | (914) | - | 13,248 | ||||||
Hedge accounting of Libor sw ap, NDF and exchange rate changes | 159,955 | - | 14,017 | 173,972 | ||||||
Unrealized exchange rate changes | 827,139 | 75,456 | - | 902,595 | ||||||
Amortization of tax goodw ill | (245,277) | - | - | (245,277) | ||||||
Accelerated depreciation | (39,048) | (11,144) | - | (50,192) | ||||||
Mark-to-market of derivatives | (10,244) | (31,121) | - | (41,365) | ||||||
Impairment of property, plant and equipment | 76,443 | (127) | - | 76,316 | ||||||
Appreciation of acquired assets | (231,020) | 3,530 | - | (227,490) | ||||||
Impairment of fixed assets | 906 | - | - | 906 | ||||||
Fair value of financial debts | 1,161 | (1,161) | - | - | ||||||
Leases | 35,367 | 205 | - | 35,572 | ||||||
Other | 60,563 | (2,618) | - | 57,945 | ||||||
678,945 | (30,698) | 14,017 | 662,264 | |||||||
Unutilized tax losses and credits | ||||||||||
Tax loss carryforw ards | 115,532 | 682 | - | 116,214 | ||||||
Social contribution tax loss carryforw ards | 41,611 | 246 | - | 41,857 | ||||||
836,088 | (29,770) | 14,017 | 820,335 | |||||||
20
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Recognized in | Recognizd in other | Closing | ||||||
Opening balance | profit or loss for | comprehensive | balance as at | |||||
Consolidated | as at 03.31.19 | the period | income (loss) | 06.30.19 | ||||
Temporary differences: | ||||||||
Provision for tax, labor, civil and environmental contingencies | 97,941 | 6,807 | - | 104,748 | ||||
Adjustment at fair value of biological assets | (32,728) | (36,955) | - | (69,683) | ||||
Hedge accounting of Libor sw ap, NDF and exchange rate changes | 165,790 | - | (9,972) | 155,818 | ||||
Amortization of tax goodw ill | (245,277) | - | - | (245,277) | ||||
Accelerated depreciation | (25,179) | (8,522) | - | (33,701) | ||||
Mark-to-market of derivatives | (82,228) | (44,447) | - | (126,675) | ||||
Appreciation of acquired assets | (253,050) | 4,537 | - | (248,513) | ||||
Impairment of fixed assets | 18,896 | 7,173 | - | 26,069 | ||||
Fair value of financial debts | 1,161 | - | - | 1,161 | ||||
Other | 50,545 | 18,616 | - | 69,161 | ||||
214,231 | (133,575) | (9,972) | 70,684 | |||||
Unutilized tax losses and credits | ||||||||
Tax loss carryforw ards | 109,760 | - | - | 109,760 | ||||
Social contribution tax loss carryforw ards | 40,819 | - | - | 40,819 | ||||
364,810 | (133,575) | (9,972) | 221,263 | |||||
As at June 30, 2020, the Company has tax loss carryforwards in the amount of R$3,339,156, in Company, and R$6,676,225 in Consolidated (R$3,115,535 and R$6,369,813 as at March 31, 2020, respectively) for which no deferred income tax and social contribution assets have been recognized.
12. LEASES
12.1 Asset use right in leases
This line item includes the amounts that correspond to the right to use the current agreements; the amount is equivalent to the present value of the obligations assumed with the counterparties. These agreements are payable on the respective maturity dates (between 1 and 13 years).
The changes for the period are broken down as follows:
Company | ||||||||||||||||||||||||
Agricultural | ||||||||||||||||||||||||
Equipment | Land | Buildings | Vehicles | partnerships | Total | |||||||||||||||||||
03.31.20 | 121,329 | 134,947 | 1,533 | 2,488 | 440,009 | 700,306 | ||||||||||||||||||
Additions/adjustments | 2,666 | 11,605 | - | - | 38,135 | 52,406 | ||||||||||||||||||
Derecognition | (3,568) | - | - | - | - | (3,568) | ||||||||||||||||||
Amortization | (13,207) | (6,811) | (256) | (589) | (27,952) | (48,815) | ||||||||||||||||||
06.30.20 | 107,220 | 139,741 | 1,277 | 1,899 | 450,192 | 700,329 | ||||||||||||||||||
Company | ||||||||||||||||||||||||
Agricultural | ||||||||||||||||||||||||
Equipment | Land | Buildings | Vehicles | partnerships | Total | |||||||||||||||||||
03.31.19 | ||||||||||||||||||||||||
Initial adoption on April 1, 2019 | 142,669 | 112,768 | 2,554 | 4,845 | 393,697 | 656,533 | ||||||||||||||||||
Additions/adjustments | 55,367 | 50,499 | - | - | 143,509 | 249,375 | ||||||||||||||||||
Derecognition | (19,991) | - | - | - | - | (19,991) | ||||||||||||||||||
Amortization | (56,716) | (28,320) | (1,021) | (2,357) | (97,197) | (185,611) | ||||||||||||||||||
03.31.20 | 121,329 | 134,947 | 1,533 | 2,488 | 440,009 | 700,306 | ||||||||||||||||||
21 |
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Consolidated | |||||||||||||||||||||||
Agricultural | |||||||||||||||||||||||
Equipment | Land | Buildings | Vehicles | partnerships | Total | ||||||||||||||||||
03.31.20 | 254,249 | 137,257 | 1,533 | 5,174 | 1,179,166 | 1,577,379 | |||||||||||||||||
Additions/adjustments | 21,084 | 11,664 | - | - | 103,391 | 136,139 | |||||||||||||||||
Derecognition | (7,468) | - | - | - | - | (7,468) | |||||||||||||||||
Amortization | (28,178) | (7,178) | (256) | (1,225) | (80,651) | (117,488) | |||||||||||||||||
06.30.20 | 239,687 | 141,743 | 1,277 | 3,949 | 1,201,906 | 1,588,562 | |||||||||||||||||
Consolidated | |||||||||||||||||||||||
Agricultural | |||||||||||||||||||||||
Equipment | Land | Buildings | Vehicles | partnerships | Total | ||||||||||||||||||
03.31.19 | |||||||||||||||||||||||
Initial adoption on April 1, 2019 | 296,896 | 115,195 | 2,554 | 10,075 | 1,068,666 | 1,493,386 | |||||||||||||||||
Additions/adjustments | 118,960 | 51,556 | - | - | 425,349 | 595,865 | |||||||||||||||||
Derecognition | (34,675) | - | - | - | - | (34,675) | |||||||||||||||||
Amortization | (126,932) | (29,494) | (1,021) | (4,901) | (314,849) | (477,197) | |||||||||||||||||
03.31.20 | 254,249 | 137,257 | 1,533 | 5,174 | 1,179,166 | 1,577,379 | |||||||||||||||||
12.2 Lease liabilities
Lease liabilities refer to future payments stated to present value at the discount rate, subject to possible effects from recoverable taxes (PIS and COFINS).
The incremental interest rate of the lease liability varies between 6.36% and 11.25% per year.
The changes for the period are broken down as follows:
Company | Consolidated | |||||||||||||||
06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | |||||||||||||
Present value of liability | 732,385 | 732,114 | 1,693,183 | 1,681,269 | ||||||||||||
732,385 | 732,114 | 1,693,183 | 1,681,269 | |||||||||||||
Classification: | ||||||||||||||||
Current | 200,569 | 215,257 | 477,464 | 498,932 | ||||||||||||
Non-current | 531,816 | 516,857 | 1,215,719 | 1,182,337 | ||||||||||||
Total | 732,385 | 732,114 | 1,693,183 | 1,681,269 | ||||||||||||
Company | Consolidated | |||||||||||||||
06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | |||||||||||||
Opening balance | 732,114 | 656,533 | 1,681,269 | 1,493,386 | ||||||||||||
Additions | 52,487 | 249,605 | 136,170 | 596,011 | ||||||||||||
Derecognition | - | (4,065) | - | (6,065) | ||||||||||||
Payments | (66,348) | (221,208) | (155,783) | (521,309) | ||||||||||||
Financial charges | 14,132 | 51,249 | 31,527 | 119,246 | ||||||||||||
Closing balance | 732,385 | 732,114 | 1,693,183 | 1,681,269 | ||||||||||||
22
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
The future payments are broken down as follows:
Company | Consolidated | ||||||
06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | ||||
Up to 1 year | 200,569 | 215,257 | 477,464 | 498,932 | |||
Up to 2 years | 157,929 | 161,243 | 367,714 | 365,273 | |||
Up to 3 years | 111,791 | 109,793 | 269,040 | 260,574 | |||
Up to 4 years | 89,650 | 87,311 | 216,082 | 210,009 | |||
Up to 5 years | 95,423 | 86,462 | 214,338 | 193,298 | |||
Above 5 years | 77,023 | 72,048 | 148,545 | 153,183 | |||
732,385 | 732,114 | 1,693,183 | 1,681,269 | ||||
13. INVESTMENTS (PROVISION FOR INVESTMENT LOSS)
Company | Consolidated | |||||||||||||
06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | |||||||||||
Investments in subsidiaries and jointly-controlled subsidiaries | 1,262,450 | 1,237,960 | 154,955 | 157,891 | ||||||||||
Other investments | 2,502 | 2,502 | 2,502 | 2,502 | ||||||||||
Investments | 1,264,952 | 1,240,462 | 157,457 | 160,393 | ||||||||||
Provision for investment loss | (1,467,473) | (1,251,234) | - | - | ||||||||||
a) Interest in subsidiaries and jointly-controlled entities
Company | Consolidated | |||||||||||
Biosev | Biosev Bioenergia | Biosev | ||||||||||
Bioenergia S.A. | International S.A. | Comercializadora S.A. | TEAG | |||||||||
Capital | 2,985,044 | 175 | 14,365 | 44,701 | ||||||||
Profit (loss) for the period | (198,768) | 30,430 | (5,939) | (1,671) | ||||||||
Equity | (1,466,362) | 356,444 | 561 | 36,939 | ||||||||
Elimination of gains on the sale of property, plant and equipment w ith related parties | (1,111) | - | - | - | ||||||||
Shareholding interest | 100% | 100% | 100% | 50% | ||||||||
Value of investments in subsidiaries under equity method | (1,467,473) | 356,444 | 561 | 18,470 | ||||||||
Goodw ill/realization of concession value, net | 494,079 | - | - | 136,485 | ||||||||
Elimination of gains on the sale of property, plant and equipment w ith related parties | - | - | - | - | ||||||||
Investments | (973,394) | 356,444 | 561 | 154,955 | ||||||||
Provision for investment loss | (1,467,473) | - | - | - | ||||||||
Equity pick up in subsidiaries | (198,768) | 30,430 | (5,939) | (835) | ||||||||
b) Changes in investments in subsidiaries, jointly-controlled entities and non-controlled entities
Company | |||||||||||||||||||||
Goodw ill | |||||||||||||||||||||
Biosev | |||||||||||||||||||||
Biosev | Bioenergia | Biosev | Tavares de | ||||||||||||||||||
Bioenergia S.A. | International S.A. | Comercializadora S.A. | Melo (*) | Ampla (*) | Other | 06.30.20 | 03.31.20 | ||||||||||||||
Opening balance | (1.251.233) | 326.014 | 6.500 | - | - | 2.502 | (916.217) | (85.938) | |||||||||||||
Capital increase | - | - | - | - | - | - | - | 4.000 | |||||||||||||
Equity pick up in subsidiaries | (198.768) | 30.430 | (5.939) | - | - | - | (174.277) | (1.109.447) | |||||||||||||
Other comprehensive income | (17.472) | - | - | - | - | - | (17.472) | 274.249 | |||||||||||||
Other | - | - | - | - | - | - | - | 919 | |||||||||||||
Value of investments in subsidiaries under equity method | (1.467.473) | 356.444 | 561 | - | - | 2.502 | (1.107.966) | (916.217) | |||||||||||||
Goodw ill | 494.079 | - | - | 407.675 | 3.691 | - | 905.445 | 905.445 | |||||||||||||
Value of investments | 494.079 | 356.444 | 561 | 407.675 | 3.691 | 2.502 | 1.264.952 | 1.240.461 | |||||||||||||
Provision for investment loss | (1.467.473) | - | - | - | - | - | (1.467.473) | (1.251.233) | |||||||||||||
(*) Companies merged in prior years.
23
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Consolidated | |||||||||||||||||
TEAG | Other | 06.30.20 | 03.31.20 | ||||||||||||||
Opening balance | 157,891 | 2,502 | 160,393 | 169,913 | |||||||||||||
Equity pick up in subsidiaries | (2,936) | - | (2,936) | (8,952) | |||||||||||||
Profit (loss) | (835) | - | (835) | (553) | |||||||||||||
Realization of concession value, net | (2,101) | - | (2,101) | (8,399) | |||||||||||||
Other comprehensive loss | - | - | - | - | |||||||||||||
Value of investments | 154,955 | 2,502 | 157,457 | 160,393 | |||||||||||||
c) Investments in jointly-controlled entities
The balances of the balance sheet and statement of operations of the company are broken down as follows:
TEAG | ||||||||||||||||
06.30.20 | 03.31.20 | |||||||||||||||
Balance sheet | ||||||||||||||||
Assets | ||||||||||||||||
Total current assets | 44,122 | 47,820 | ||||||||||||||
Long-term receivables | 3,525 | 3,032 | ||||||||||||||
Property, plant and equipment and intangible assets | 123,710 | 124,014 | ||||||||||||||
Total non-current assets | 127,235 | 127,046 | ||||||||||||||
Total assets | 171,357 | 174,866 | ||||||||||||||
Liabilities | ||||||||||||||||
Total current liabilities | 17,370 | 18,286 | ||||||||||||||
Total non-current liabilities | 117,048 | 117,970 | ||||||||||||||
Equity | ||||||||||||||||
Total equity | 36,939 | 38,610 | ||||||||||||||
Total liabilities and equity | 171,357 | 174,866 | ||||||||||||||
TEAG | ||||||||||||||||
06.30.20 | 03.31.20 | |||||||||||||||
Statement of operations | ||||||||||||||||
Net revenue | 13,433 | 52,971 | ||||||||||||||
Operating expenses | ||||||||||||||||
General, administrative and selling expenses | (14,796) | (51,652) | ||||||||||||||
Other operating income | 103 | 4,541 | ||||||||||||||
Operating income (loss) before finance income (costs) | (1,261) | 5,860 | ||||||||||||||
Finance income (costs), net | (1,294) | (7,529) | ||||||||||||||
Loss before taxation | (2,555) | (1,669) | ||||||||||||||
Income tax and social contribution | 884 | 563 | ||||||||||||||
Loss for the period | (1,671) | (1,106) | ||||||||||||||
24
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
14. PROPERTY, PLANT AND EQUIPMENT
Company | ||||||||||||||||||||||
06.30.20 | 03.31.20 | |||||||||||||||||||||
Accumulated | Accumulated | |||||||||||||||||||||
Cost | depreciation | Net | Cost | depreciation | Net | |||||||||||||||||
Land | 15,095 | - | 15,095 | 15,095 | - | 15,095 | ||||||||||||||||
Buildings | 260,119 | (93,531) | 166,588 | 259,775 | (92,431) | 167,344 | ||||||||||||||||
Improvements | 25,588 | (13,714) | 11,874 | 25,587 | (13,501) | 12,086 | ||||||||||||||||
Facilities | 354,151 | (211,251) | 142,900 | 351,848 | (208,192) | 143,656 | ||||||||||||||||
Furniture and fixtures | 12,259 | (8,334) | 3,925 | 12,186 | (8,193) | 3,993 | ||||||||||||||||
IT equipment | 30,951 | (28,930) | 2,021 | 30,927 | (28,672) | 2,255 | ||||||||||||||||
Machinery and equipment (*) | 2,256,539 | (1,451,286) | 805,253 | 2,246,767 | (1,388,282) | 858,485 | ||||||||||||||||
Vehicles | 10,586 | (8,669) | 1,917 | 10,615 | (8,567) | 2,048 | ||||||||||||||||
Agricultural machinery and implements (**) | 962,828 | (850,387) | 112,441 | 960,728 | (805,016) | 155,712 | ||||||||||||||||
Bearer plant | 1,677,662 | (1,410,218) | 267,444 | 1,627,300 | (1,366,804) | 260,496 | ||||||||||||||||
5,605,778 | (4,076,320) | 1,529,458 | 5,540,828 | (3,919,658) | 1,621,170 | |||||||||||||||||
Construction in progress (Note 14.1) | 12,723 | - | 12,723 | 14,263 | - | 14,263 | ||||||||||||||||
5,618,501 | (4,076,320) | 1,542,181 | 5,555,091 | (3,919,658) | 1,635,433 | |||||||||||||||||
Consolidated | ||||||||||||||||||||||
06.30.20 | 03.31.20 | |||||||||||||||||||||
Accumulated | Accumulated | |||||||||||||||||||||
Cost | depreciation | Net | Cost | depreciation | Net | |||||||||||||||||
Land | 21,084 | - | 21,084 | 21,084 | - | 21,084 | ||||||||||||||||
Buildings | 477,944 | (187,251) | 290,693 | 475,559 | (184,730) | 290,829 | ||||||||||||||||
Improvements | 129,166 | (61,142) | 68,024 | 128,777 | (60,118) | 68,659 | ||||||||||||||||
Facilities | 555,011 | (326,644) | 228,367 | 545,312 | (320,850) | 224,462 | ||||||||||||||||
Furniture and fixtures | 20,940 | (14,659) | 6,281 | 20,731 | (14,443) | 6,288 | ||||||||||||||||
IT equipment | 61,358 | (53,972) | 7,386 | 60,607 | (53,128) | 7,479 | ||||||||||||||||
Machinery and equipment (*) | 5,646,155 | (3,808,881) | 1,837,274 | 5,595,046 | (3,657,614) | 1,937,432 | ||||||||||||||||
Vehicles | 35,177 | (34,195) | 982 | 35,459 | (34,121) | 1,338 | ||||||||||||||||
Agricultural machinery and inputs (**) | 1,736,989 | (1,515,141) | 221,848 | 1,734,333 | (1,426,694) | 307,639 | ||||||||||||||||
Bearer plant | 3,065,723 | (2,505,707) | 560,016 | 2,966,966 | (2,427,778) | 539,188 | ||||||||||||||||
11,749,547 | (8,507,592) | 3,241,955 | 11,583,874 | (8,179,476) | 3,404,398 | |||||||||||||||||
Construction in progress (Note 14.1) | 24,750 | - | 24,750 | 72,993 | - | 72,993 | ||||||||||||||||
11,774,297 | (8,507,592) | 3,266,705 | 11,656,867 | (8,179,476) | 3,477,391 | |||||||||||||||||
- Includes deferred manufacturing costs. (**) Includes deferred agricultural costs.
25
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
The changes in the net value of property, plant and equipment are as follows:
Company | Consolidated | |||||||
06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | |||||
Opening balance | 1,635,433 | 1,697,433 | 3,477,391 | 3,641,525 | ||||
Acquisitions and additions | 55,671 | 378,970 | 110,768 | 793,991 | ||||
Residual value of w rite-offs | (16) | (53,726) | (606) | (58,913) | ||||
Transfer to assets held for sale | 7,028 | 19,312 | 7,028 | 22,818 | ||||
losses (*) | - | 706 | 9 | 522 | ||||
Depreciation for the period/year | (155,935) | (407,262) | (327,885) | (922,552) | ||||
1,542,181 | 1,635,433 | 3,266,705 | 3,477,391 | |||||
(*) See Note 14.3.
14.1 Construction in progress
Construction in progress is broken down by plant as follows:
The balance of construction in progress refers basically to the adaptation of industrial facilities, increase in sugar production and refurbishment of administrative facilities.
14.2 Fixed assets given in guarantee and commitments for acquisition of fixed assets
As at June 30, 2020, the Company had agreements with suppliers for acquisition of fixed assets, amounting to R$19,041 (R$21,607 as at March 31, 2020), and total fixed assets given in guarantee in the amount of R$1,102,876 (R$809,362 as at March 31, 2020).
14.3 Impairment
As at June 30, 2020, the reversal/impairment totaled R$9 in Consolidated (R$706, in Company, and R$522, in Consolidated, as at March 31, 2020), due the sales and/or transfers of fixed assets between industrial clusters of the Group.
As at June 30, 2020, the accumulated balance of impairment is R$61,491, in Company, and R$190,952 in Consolidated (R$61,491 and R$190,961 as at March 31, 2020, respectively).
The main impaired assets comprise land, buildings, furniture and fixtures, computers, machinery and equipment, vehicles, and agricultural machinery and implements.
15. INTANGIBLE ASSETS
Company | Consolidated | ||||||
06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | ||||
Goodw ill | |||||||
Biosev Bioenergia | - | - | 494,079 | 494,079 | |||
Usinas Tavares de Melo | - | - | 407,675 | 407,675 | |||
Ampla | - | - | 3,691 | 3,691 | |||
- | - | 905,445 | 905,445 | ||||
Softw are | |||||||
Licenses | 10,456 | 11,856 | 11,475 | 12,997 | |||
10,456 | 11,856 | 11,475 | 12,997 | ||||
Other | - | - | 3,218 | 3,522 | |||
- | - | 3,218 | 3,522 | ||||
10,456 | 11,856 | 920,138 | 921,964 | ||||
26
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
The changes in intangible assets are as follows:
Company | |||||||||||||||
Reversal | |||||||||||||||
03.31.20 | Additions | Write-off | Amortization | Impairment | 06.30.20 | ||||||||||
Softw are | |||||||||||||||
Licences | 11,856 | 189 | (141) | (1,589) | 141 | 10,456 | |||||||||
11,856 | 189 | (141) | (1,589) | 141 | 10,456 | ||||||||||
Company | |||||||||||||||
03.31.19 | Additions | Amortization | 06.30.19 | ||||||||||||
Softw are | |||||||||||||||
Licences | 9,126 | 5,585 | (1,463) | 13,248 | |||||||||||
9,126 | 5,585 | (1,463) | 13,248 | ||||||||||||
Consolidated | |||||||||||||||
Reversal | |||||||||||||||
03.31.20 | Additions | Write-off | Amortization | Impairment | 06.30.20 | ||||||||||
Goodw ill | |||||||||||||||
Biosev Bioenergia | 494,079 | - | - | - | - | 494,079 | |||||||||
Usinas Tavares de Melo | 407,675 | - | - | - | - | 407,675 | |||||||||
Ampla | 3,691 | - | - | - | - | 3,691 | |||||||||
Softw are | |||||||||||||||
Licences | 12,997 | 190 | (251) | (1,712) | 251 | 11,475 | |||||||||
Other | |||||||||||||||
Other | 3,522 | - | - | (304) | - | 3,218 | |||||||||
921,964 | 190 | (251) | (2,016) | 251 | 920,138 | ||||||||||
Consolidated | |||||||||
03.31.19 | Additions | Amortization | 06.30.19 | ||||||
Goodw ill | |||||||||
Biosev Bioenergia | 494,079 | - | - | 494,079 | |||||
Usinas Tavares de Melo | 407,675 | - | - | 407,675 | |||||
Ampla | 3,691 | - | - | 3,691 | |||||
Softw are | |||||||||
Licences | 9,726 | 6,475 | (1,615) | 14,586 | |||||
Other | |||||||||
Other | 4,489 | - | (424) | 4,065 | |||||
919,660 | 6,475 | (2,039) | 924,096 | ||||||
27
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
16. BORROWINGS AND FINANCING
Company
Weighted average financial
Description
Advance on Foreign Exchange Contract (ACC)
(a)
Export Prepayment - PPE (a)
Constitutional Fund to Finance the the Midw est -
FCO
Finame
Export Credit Note and Bill - NCE
Offshore Loan (a)
Currency | charges | Maturity (*) | Collaterals | 06.30.20 | 03.31.20 | ||||
US$ | Exchange rate change plus average | As at 03.31.23 | Guarantee and promissory note | 1,766,953 | 1,625,953 | ||||
interest rate of 5.37% p.a. | |||||||||
US$ | Exchange rate change plus Libor | As at 03.25.23 | Promissory note, receivables and | 725,973 | 680,727 | ||||
plus average interest rate of 4% p.a. | collateral | ||||||||
R$ | Interest of 10% p.a. | As at 12.01.23 | Guarantee, conditional sale and | 48,410 | 51,868 | ||||
receivables | |||||||||
R$ | Average interest rate of 9.38% p.a. | From 04.17.23 to | Conditional sale, guarantee and | 33,947 | 38,370 | ||||
and TLP + 4.92% p.a. | 04.15.25 | promissory note | |||||||
R$ | CDI plus average interest rate of 2% | As at 04.29.22 | Guarantee, promissory note and collateral | 181,082 | 181,212 | ||||
Exchange rate change plus Libor | |||||||||
US$ | plus average interest rate of 5.75% | As at 10.15.27 | Mortgage, credit rights and collateral | 275,789 | 285,479 | ||||
p.a. |
Bank Credit Note - CCB | R$ | CDI plus average interest rate of 2% As at 03.30.23 | Collection and assignment of receivables |
Current liabilities | |||
Non-current liabilities |
Weighted average financial | ||||||||
Description | Currency | charges | Maturity (*) | Collaterals | ||||
Guarantee, receivables, mortgage and | ||||||||
Restructured debt (ex-Debentures) - R$ | R$ | CDI plus 1.72% p.a. | As at 07.10.24 | |||||
shares | ||||||||
Exchange rate change plus Libor | Guarantee, receivables, mortgage and | |||||||
Restructured debt - US$ | US$ | plus average interest rate of 2.47% | As at 07.10.23 | |||||
shares | ||||||||
p.a. | ||||||||
Restructured debt (debenture) - R$ (a) | R$ | CDI plus 1.72% p.a. | As at 07.10.24 | Guarantee, receivables, mortgage and | ||||
shares | ||||||||
139,157 139,434
3,171,311 3,003,043
421,054 2,935,559
2,750,25767,484
Consolidated
06.30.20 03.31.20
100,925 99,771
789,201 741,176
142,420 140,590
Advance on Foreign Exchange Contract - ACC | US$ |
(a) | |
Export Prepayment - PPE (a)/(b) | US$ |
Constitutional Fund to Finance the Midw est - FCO | R$ |
Finame | R$ |
Export Credit Note and Bill - NCE | R$ |
Offshore Loan (a) | US$ |
Bank Credit Note - CCB | R$ |
Exchange rate change plus average | As at 03.31.23 | Guarantee and promissory note |
interest rate of 5.40% p.a. | ||
Exchange rate change plus Libor | From 03.25.2023 | Guarantee, promissory note,receivables |
plus average interest rate of 5.64% | ||
to 04.30.23 | and collateral | |
p.a. | ||
Interest of 10% p.a. | As at 12.01.23 | Guarantee, conditional sale and |
receivables | ||
Average interest rate of 9.55% p.a. | From 04.15.21 to | Conditional sale, guarantee and |
and TLP + 4.92% p.a. | 04.15.25 | promissory note |
CDI plus average interest rate of 2.% | As at 04.29.22 | Guarantee, promissory note and collateral |
p.a. | ||
Exchange rate change plus Libor | ||
plus average interest rate of 5.75% | As at 10.15.27 | Mortgage, credit rights and collateral |
p.a. | ||
CDI plus average interest rate of 2% | As at 03.30.23 | Collection and assignment of receivables |
p.a. | ||
3,839,390 3,642,512
2,178,176 1,962,581
48,410 51,868
67,358 76,802
181,082 181,212
275,789 285,479
139,157 139,434
7,761,908 7,321,425
Current liabilities
Non-current liabilities
(*) Refers to the last maturity date of the agreements.
1,168,611 7,225,234
6,593,29796,191
- Net of commission costs and deferred expenses, in the amount of R$2,758, in Company, and R$8,934, in Consolidated, as at June 30, 2020 (R$2,755, in Company, and R$8,843, in Consolidated, as at March 31, 2020), monthly recorded in profit or loss through the maturity of such transaction.
- Include export prepayments, contracted on January 9, 2015, by subsidiary Biosev Bioenergia International S.A. with the trade union of foreign financial institutions, in the amount of R$1,210,605 as at June 30, 2020 (R$1,150,301 as at March 31, 2020). These operations are collateralized by a set of assets for settlement. As at June 30, 2020, the foreign currency- denominated deposits comprise, together with the agricultural production (sugarcane) of specific units and sugar and ethanol inventories, the ratio of 115.66% of the obligations.
28
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Non-current liabilities mature as follows (crop year):
Company | Consolidated | |||||||
06.30.20 | 06.30.20 | |||||||
July 2021 to March 2022 | 1,019,395 | 2,673,689 | ||||||
April 2022 to March 2023 | 1,524,316 | 3,377,486 | ||||||
April 2023 to March 2024 | 53,062 | 378,721 | ||||||
April 2024 to March 2025 | 41,990 | 48,828 | ||||||
April 2025 to October 2027 | 111,494 | 114,573 | ||||||
2,750,257 | 6,593,297 | |||||||
The verification of compliance with the restrictive clauses occurs annually, on the balance sheet date. On March 31, 2020, the Company did not reach certain indicators established for financial covenants, however the Company obtained a waiver from its financial creditors for contracts subject to the compliance with such indicators, being exempted from complying with the financial covenants not reached, maintaining the original maturity dates.
16.1 Changes in borrowings and financing
Opening balance
Additions
Payment of principal
Interest, exchange rate changes and inflation adjustments and adjustment to fair value of loans, net
Company | Consolidated | |||||||||
06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | |||||||
3,003,043 | 2,508,176 | 7,321,425 | 5,979,328 | |||||||
492,784 | 1,840,335 | 859,770 | 4,459,444 | |||||||
(475,322) | (1,961,531) | (785,958) | (4,733,209) | |||||||
198,543 | 825,313 | 455,673 | 2,080,661 |
Payment of interest | (47,737) | (209,250) | (89,002) | (464,799) | ||||
Closing balance | 3,171,311 | 3,003,043 | 7,761,908 | 7,321,425 | ||||
17. TRADE PAYABLES
Company | Consolidated | ||||||
06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | ||||
Related parties (Note 20) | |||||||
In Brazil | 3,919 | 6,068 | 5,049 | 8,001 | |||
Abroad | 98,382 | 89,808 | 5,169 | 4,494 | |||
102,301 | 95,876 | 10,218 | 12,495 | ||||
Third parties | |||||||
In Brazil | 218,954 | 215,843 | 623,669 | 662,534 | |||
Abroad | 176 | 3,118 | 61,138 | 129,839 | |||
219,130 | 218,961 | 684,807 | 792,373 | ||||
321,431 | 314,837 | 695,025 | 804,868 | ||||
Current liabilities | 316,809 | 309,104 | 690,168 | 798,903 | |||
Non-current liabilities | 4,622 | 5,733 | 4,857 | 5,965 | |||
29
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
18. TAXES PAYABLE
Company | Consolidated | ||||||
06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | ||||
Payment in installments | 79 | 125 | 2,099 | 2,137 | |||
Tax on manufactured products (IPI) | - | - | 569 | 1,027 | |||
State VAT (ICMS) | 3,408 | 6,916 | 3,408 | 8,152 | |||
Taxes on revenue (PIS and COFINS) | 601 | 314 | 1,583 | 4,979 | |||
Social Security Tax (INSS) | 9,064 | 3,867 | 21,209 | 11,083 | |||
Income tax (IRPJ) and social contribution (CSLL) | 598 | 3,378 | 32,798 | 40,299 | |||
Withholding Income Tax (IRPF) | 12,660 | 12,660 | 12,660 | 12,660 | |||
Other | 13,117 | 12,555 | 13,440 | 13,316 | |||
39,527 | 39,815 | 87,766 | 93,653 | ||||
Current liabilities | 21,203 | 21,314 | 69,442 | 75,152 | |||
Non-current liabilities | 18,324 | 18,501 | 18,324 | 18,501 | |||
19. PROVISION FOR TAX, LABOR, CIVIL AND ENVIRONMENTAL CONTINGENCIES
The Company is a party to various ongoing lawsuits involving tax, labor, civil and environmental matters arising in the normal course of business.
Company | |||||||||||||
Inflation | Written-off | Written-off | |||||||||||
03.31.20 | adjustment | Additions | reversals | payments | 06.30.20 | ||||||||
Tax | |||||||||||||
Income tax (IRPJ) and social contribution (CSLL) | 78 | - | - | - | - | 78 | |||||||
78 | - | - | - | - | 78 | ||||||||
Labor | 84,919 | 1,966 | 6,756 | (2,909) | (1,413) | 89,319 | |||||||
Environmental | 1,696 | (111) | 326 | (263) | - | 1,648 | |||||||
Civil | 20,783 | 374 | 290 | (301) | - | 21,146 | |||||||
Criminal | 605 | 14 | - | - | - | 619 | |||||||
108,003 | 2,243 | 7,372 | (3,473) | (1,413) | 112,732 | ||||||||
108,081 | 2,243 | 7,372 | (3,473) | (1,413) | 112,810 | ||||||||
Company | |||||||||||||
Inflation | Written-off | Written-off | |||||||||||
03.31.19 | adjustment | Additions | reversals | payments | 06.30.19 | ||||||||
Tax | |||||||||||||
Income tax (IRPJ) and social contribution (CSLL) | 76 | 1 | - | - | - | 77 | |||||||
76 | 1 | - | - | - | 77 | ||||||||
Labor | 128,197 | (56) | 11,148 | (9,282) | (1,523) | 128,484 | |||||||
Environmental | 1,468 | 210 | 3 | (73) | - | 1,608 | |||||||
Civil | 8,338 | 1,075 | 5,027 | (516) | - | 13,924 | |||||||
138,003 | 1,229 | 16,178 | (9,871) | (1,523) | 144,016 | ||||||||
138,079 | 1,230 | 16,178 | (9,871) | (1,523) | 144,093 | ||||||||
30
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Consolidated | ||||||||||||||||||||||||||||||
Inflation | Written-off | Written-off | ||||||||||||||||||||||||||||
03.31.20 | adjustment | Additions | reversals | payments | 06.30.20 | |||||||||||||||||||||||||
Tax | ||||||||||||||||||||||||||||||
IPI levied on sugar sales | 17,785 | 33 | - | - | - | 17,818 | ||||||||||||||||||||||||
PIS and COFINS | 3,406 | - | - | - | - | 3,406 | ||||||||||||||||||||||||
Income tax (IRPJ) and social contribution (CSLL) | 2,852 | - | - | - | - | 2,852 | ||||||||||||||||||||||||
Other | 16 | - | - | - | - | 16 | ||||||||||||||||||||||||
24,059 | 33 | - | - | - | 24,092 | |||||||||||||||||||||||||
Labor | 227,868 | 3,714 | 23,933 | (2,145) | (13,616) | 239,754 | ||||||||||||||||||||||||
Environmental | 11,354 | 1,011 | 877 | (304) | - | 12,938 | ||||||||||||||||||||||||
Civil | 30,782 | 93 | 524 | (627) | - | 30,772 | ||||||||||||||||||||||||
Criminal | 605 | 14 | - | - | - | 619 | ||||||||||||||||||||||||
270,609 | 4,832 | 25,334 | (3,076) | (13,616) | 284,083 | |||||||||||||||||||||||||
294,668 | 4,865 | 25,334 | (3,076) | (13,616) | 308,175 | |||||||||||||||||||||||||
Consolidated | ||||||||||||||||||||||||||||||
Inflation | Written-off | Written-off | ||||||||||||||||||||||||||||
03.31.19 | adjustment | Additions | reversals | payments | 06.30.19 | |||||||||||||||||||||||||
Tax | ||||||||||||||||||||||||||||||
IPI levied on sugar sales | 17,584 | 57 | - | - | - | 17,641 | ||||||||||||||||||||||||
PIS and COFINS | 3,406 | - | - | - | - | 3,406 | ||||||||||||||||||||||||
Income tax (IRPJ) and social contribution (CSLL) | 2,850 | 1 | - | - | - | 2,851 | ||||||||||||||||||||||||
Other | 16 | - | - | - | - | 16 | ||||||||||||||||||||||||
23,856 | 58 | - | - | - | 23,914 | |||||||||||||||||||||||||
Labor | 236,368 | 2,514 | 31,176 | (14,686) | (5,484) | 249,888 | ||||||||||||||||||||||||
Environmental | 7,611 | 385 | 3 | (474) | - | 7,525 | ||||||||||||||||||||||||
Civil | 19,402 | 1,695 | 5,943 | (1,108) | - | 25,932 | ||||||||||||||||||||||||
263,381 | 4,594 | 37,122 | (16,268) | (5,484) | 283,345 | |||||||||||||||||||||||||
287,237 | 4,652 | 37,122 | (16,268) | (5,484) | 307,259 | |||||||||||||||||||||||||
Contingencies - court or out-of-court claims classified as possible losses and not accrued
Tax
The tax claims (court and out-of-court) as at June 30, 2020, with an acknowledged possible likelihood of loss and not accrued are shown in the table below:
Company | Consolidated | |||||||||||||||
06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | |||||||||||||
Tax | 754,719 | 725,832 | 1,691,450 | 1,652,707 | ||||||||||||
754,719 | 725,832 | 1,691,450 | 1,652,707 | |||||||||||||
Among the contingencies for which a provision has not been recognized and that have been assessed as possible loss is the collection of ICMS due to an alleged difference identified in inventories. Additionally, there is a discussion also involving ICMS on the reasonableness in levying ICMS on export of semi-finished products.
31
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Civil, environmental and labor
The civil, environmental and labor claims (court and out-of-court) as at June 30, 2020, with an acknowledged possible likelihood of loss and not accrued are shown in the table below:
Company | Consolidated | |||||||||||||||
06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | |||||||||||||
Civil | 107,919 | 101,979 | 154,668 | 147,405 | ||||||||||||
Environmental | 11,257 | 12,278 | 73,754 | 74,433 | ||||||||||||
Labor | 73,117 | 76,297 | 124,949 | 126,742 | ||||||||||||
192,294 | 190,554 | 353,371 | 348,580 | |||||||||||||
As at June 30, 2020, the Group was a party to labor, environmental and civil lawsuits whose likelihood of loss is considered possible based on the opinion of Group's legal counsel.
Labor claims are substantially related to (i) working hours; (ii) time in transit; (iii) additional premiums; (iv) refund of deductions, such as trade union fees; (v) contractual exclusivity; (vi) jointly-liability with service providers; (vii) occupational accidents and/or hazards/diseases; (viii) organizational climate; (ix) validity of the collective bargaining agreement, and (x) compensation costs in relation to the items mentioned above.
Civil lawsuits basically refer to discussions involving contractual issues and occupational and/or traffic accidents, collection, possession issues and general indemnities.
Environmental lawsuits are substantially related to: (i) burn of sugarcane straw; and (ii) alleged non-authorized intervention or damages in an area considered by environmental authorities as a permanent preservation area.
20. RELATED PARTIES
The information on related-party transactions has not significantly changed compared to the information disclosed in the financial statements as at March 31, 2020.
The related-party transactions described in the tables below refer basically to: (i) sales in the domestic and international markets at the price agreed between the parties, based on the market quotation; (ii) loan transactions; (iii) apportionment of costs relating to the shared facilities; (iv) provision of brokerage services involving derivative transactions; (v) commodities export performance operations; and (vi) lifting and sugar storage services.
The tables below show the balances and transactions as at June 30, 2020 between the Company and its subsidiaries, which are consolidated in its balance sheet:
Company | ||||||||||||||
Assets | ||||||||||||||
Subsidiaries | Trade receivables | Loan | Total | |||||||||||
Biosev Bioenergia International S.A. | 164,675 | - | 164,675 | |||||||||||
Biosev Bioenergia S.A. | 10,399 | - | 10,399 | |||||||||||
Biosev Comercializadora S.A. | 1,223 | - | 1,223 | |||||||||||
06.30.20 | 176,297 | - | 176,297 | |||||||||||
Biosev Bioenergia International S.A. | 132,489 | - | 132,489 | |||||||||||
Biosev Bioenergia S.A. | 4,164 | 26,736 | 30,900 | |||||||||||
Biosev Comercializadora S.A. | 3,334 | - | 3,334 | |||||||||||
03.31.20 | 139,987 | 26,736 | 166,723 | |||||||||||
32
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Company | ||||||||||||||
Liabilities | ||||||||||||||
Subsidiaries | Advances from | |||||||||||||
Trade payables (*) | customers (**) | Loan (**) | Total | |||||||||||
Biosev Bioenergia International S.A. | 101,607 | 870,768 | - | 972,375 | ||||||||||
Biosev Bioenergia S.A. | 2,554 | - | 939 | 3,493 | ||||||||||
Biosev Comercializadora S.A. | 496 | - | - | 496 | ||||||||||
Sociedade Operadora Portuária de São Paulo S/A | - | - | 14,196 | 14,196 | ||||||||||
06.30.20 | 104,657 | 870,768 | 15,135 | 990,560 | ||||||||||
Biosev Bioenergia International S.A. | 95,932 | 814,736 | - | 910,668 | ||||||||||
Biosev Bioenergia S.A. | 4,134 | - | - | 4,134 | ||||||||||
Sociedade Operadora Portuária de São Paulo S/A | - | - | 14,108 | 14,108 | ||||||||||
03.31.20 | 100,066 | 814,736 | 14,108 | 928,910 | ||||||||||
- As at June 30, 2020, the amount of R$3,225 (R$3,062 as at March 31, 2020) was recorded in current liabilities, in line item "Other payables".
(**) As at June 30, 2020, the amounts of R$25,457 (R$12,231 as at March 31, 2020) and R$845,311 (R$802,505 as at March 31, 2020) were recorded in current liabilities and non-current liabilities, respectively.
Company | |||||||||||||||||||||||||
Profit (loss) | |||||||||||||||||||||||||
Income | Expenses | ||||||||||||||||||||||||
Subsidiaries | Sales | Interest | Total | Purchases | Interest | Total | |||||||||||||||||||
Biosev Bioenergia International S.A. | 138,314 | - | 138,314 | (546) | (68,621) | (69,167) | |||||||||||||||||||
Biosev Bioenergia S.A. | 22,619 | - | 22,619 | (176) | (84) | (260) | |||||||||||||||||||
Biosev Comercializadora S.A. | 4,902 | - | 4,902 | (1,516) | - | (1,516) | |||||||||||||||||||
Sociedade Operadora Portuária de São Paulo S/A | - | - | - | - | (245) | (245) | |||||||||||||||||||
06.30.20 | 165,835 | - | 165,835 | (2,238) | (68,950) | (71,188) | |||||||||||||||||||
Biosev Bioenergia International S.A. | 20,174 | 10,425 | 30,599 | - | (10,852) | (10,852) | |||||||||||||||||||
Biosev Bioenergia S.A. | 486 | 155 | 641 | (817) | (5) | (822) | |||||||||||||||||||
Biosev Comercializadora S.A. | 6,021 | 61 | 6,082 | - | - | - | |||||||||||||||||||
Sociedade Operadora Portuária de São Paulo S/A | - | - | - | - | (195) | (195) | |||||||||||||||||||
06.30.19 | 26,681 | 10,641 | 37,322 | (817) | (11,052) | (11,869) | |||||||||||||||||||
The tables below show the balances and transactions as at June 30, 2020 between the Company and other related parties:
Company | |||||||||||||||
Assets | |||||||||||||||
Trade | Advances to | ||||||||||||||
Derivatives (*) | receivables | suppliers | Total | ||||||||||||
Companies under common control | |||||||||||||||
Louis Dreyfus Company Suisse S.A. | - | 16,227 | - | 16,227 | |||||||||||
Louis Dreyfus Company Brasil S.A. | - | 509 | 921,351 | 921,860 | |||||||||||
Term Commodities Inc. | 39,565 | - | - | 39,565 | |||||||||||
06.30.20 | 39,565 | 16,736 | 921,351 | 977,652 | |||||||||||
Companies under common control | |||||||||||||||
Louis Dreyfus Company Suisse S.A. | - | 1,014 | - | 1,014 | |||||||||||
Louis Dreyfus Company Brasil S.A. | - | - | 885,170 | 885,170 | |||||||||||
Term Commodities Inc. | 19,112 | - | - | 19,112 | |||||||||||
03.31.20 | 19,112 | 1,014 | 885,170 | 905,296 |
33
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Consolidated | |||||||||||||||
Assets | |||||||||||||||
Trade | Advances to | ||||||||||||||
Derivatives (*) | receivables | suppliers | Total | ||||||||||||
Companies under common control | |||||||||||||||
Louis Dreyfus Company Ethanol Merchandising LLC | - | 95 | - | 95 | |||||||||||
Louis Dreyfus Company Brasil S.A. | - | 533 | 1.743.998 | 1.744.531 | |||||||||||
Louis Dreyfus Company Suisse S.A. | - | 218.957 | - | 218.957 | |||||||||||
Louis Dreyfus Commodities Agroindustrial S.A. | - | 24 | - | 24 | |||||||||||
Term Commodities Inc. | 39.565 | 115 | - | 39.680 | |||||||||||
06.30.20 | 39.565 | 219.724 | 1.743.998 | 2.003.287 | |||||||||||
Companies under common control | |||||||||||||||
Louis Dreyfus Company Ethanol Merchandising LLC | - | 91 | - | 91 | |||||||||||
Louis Dreyfus Company Brasil S.A. | - | - | 2.506.685 | 2.506.685 | |||||||||||
Louis Dreyfus Company Suisse S.A. | - | 2.153 | - | 2.153 | |||||||||||
Term Commodities Inc. | 19.112 | 261 | - | 19.373 | |||||||||||
03.31.20 | 19.112 | 2.505 | 2.506.685 | 2.528.302 | |||||||||||
- As at June 30, 2020, the amount of R$37,203 (R$19,112 as at March 31, 2020) was recorded in line item "Short-term investments", relating to margin deposits in derivative transactions.
Company | ||||||||||||
Liabilities | ||||||||||||
Trade | Advances from | |||||||||||
Derivatives | payables | customers | Total | |||||||||
Companies under common control | ||||||||||||
Louis Dreyfus Company Brasil S.A. | - | 281 | - | 281 | ||||||||
Louis Dreyfus Company Suisse S.A. | - | - | 914,492 | 914,492 | ||||||||
- | 281 | 914,492 | 914,773 | |||||||||
Jointly-controlled entity | ||||||||||||
TEAG - Terminal Exp. Açúcar Guarujá Ltda. | - | 588 | - | 588 | ||||||||
06.30.20 | - | 869 | 914,492 | 915,361 | ||||||||
Companies under common control | ||||||||||||
Louis Dreyfus Company Brasil S.A. | - | 185 | - | 185 | ||||||||
Louis Dreyfus Company Suisse S.A. | - | - | 878,580 | 878,580 | ||||||||
Term Commodities Inc. | 6,585 | - | - | 6,585 | ||||||||
6,585 | 185 | 878,580 | 885,350 | |||||||||
Jointly-controlled entity | ||||||||||||
TEAG - Terminal Exp. Açúcar Guarujá Ltda. | - | 1,749 | - | 1,749 | ||||||||
- | 1,749 | - | 1,749 | |||||||||
03.31.20 | 6,585 | 1,934 | 878,580 | 887,099 |
34
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Consolidated | |||||||||||||||||||||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||||||||||||
Trade | Advances from | ||||||||||||||||||||||||||||||||||||||
Derivatives | payables | customers | Total | ||||||||||||||||||||||||||||||||||||
Companies under common control | |||||||||||||||||||||||||||||||||||||||
Louis Dreyfus Company Brasil S.A. | - | 406 | - | 406 | |||||||||||||||||||||||||||||||||||
Louis Dreyfus Company Suisse S.A. | 1,862 | 4,657 | 1,732,798 | 1,739,317 | |||||||||||||||||||||||||||||||||||
LDC Trading and Services Co. S.A. | - | 512 | - | 512 | |||||||||||||||||||||||||||||||||||
1,862 | 5,575 | 1,732,798 | 1,740,235 | ||||||||||||||||||||||||||||||||||||
Jointly-controlled entity | |||||||||||||||||||||||||||||||||||||||
TEAG - Terminal Exp. Açúcar Guarujá Ltda. | - | 4,643 | - | 4,643 | |||||||||||||||||||||||||||||||||||
- | 4,643 | - | 4,643 | ||||||||||||||||||||||||||||||||||||
06.30.20 | 1,862 | 10,218 | 1,732,798 | 1,744,878 | |||||||||||||||||||||||||||||||||||
Companies under common control | |||||||||||||||||||||||||||||||||||||||
Louis Dreyfus Company Brasil S.A. | - | 309 | - | 309 | |||||||||||||||||||||||||||||||||||
Louis Dreyfus Company Suisse S.A. | 289 | 4,251 | 2,486,605 | 2,491,145 | |||||||||||||||||||||||||||||||||||
LDC Trading and Services Co. S.A. | - | 243 | - | 243 | |||||||||||||||||||||||||||||||||||
Term Commodities Inc. | 6,585 | - | - | 6,585 | |||||||||||||||||||||||||||||||||||
6,874 | 4,803 | 2,486,605 | 2,498,282 | ||||||||||||||||||||||||||||||||||||
Jointly-controlled entity | |||||||||||||||||||||||||||||||||||||||
TEAG - Terminal Exp. Açúcar Guarujá Ltda. | - | 7,692 | - | 7,692 | |||||||||||||||||||||||||||||||||||
- | 7,692 | - | 7,692 | ||||||||||||||||||||||||||||||||||||
03.31.20 | 6,874 | 12,495 | 2,486,605 | 2,505,974 | |||||||||||||||||||||||||||||||||||
Company | |||||||||||||||||||||||||||||||||||||||
Profit (loss) | |||||||||||||||||||||||||||||||||||||||
Income | Expenses | ||||||||||||||||||||||||||||||||||||||
Interest and | Interest and | ||||||||||||||||||||||||||||||||||||||
exchange rate | exchange rate | Total | |||||||||||||||||||||||||||||||||||||
Sales | changes | Total income | Sales | changes | expenses | ||||||||||||||||||||||||||||||||||
Companies under common control | |||||||||||||||||||||||||||||||||||||||
Louis Dreyfus Company Brasil S.A. | - | - | - | (243,066) | - | (243,066) | |||||||||||||||||||||||||||||||||
Louis Dreyfus Company Suisse S.A. | 270,610 | - | 270,610 | - | - | - | |||||||||||||||||||||||||||||||||
Macrofértil Indústria e Comércio de Fertilizantes Ltda. | - | - | - | (105) | - | (105) | |||||||||||||||||||||||||||||||||
Term Commodities Inc. | - | - | - | (3,871) | - | (3,871) | |||||||||||||||||||||||||||||||||
270,610 | - | 270,610 | (247,042) | - | (247,042) | ||||||||||||||||||||||||||||||||||
Jointly-controlled entity | |||||||||||||||||||||||||||||||||||||||
Teag-Terminal Exp. Açúcar Guarujá Ltda. | - | - | - | (237) | - | (237) | |||||||||||||||||||||||||||||||||
- | - | - | (237) | - | (237) | ||||||||||||||||||||||||||||||||||
06.30.20 | 270,610 | - | 270,610 | (247,279) | - | (247,279) | |||||||||||||||||||||||||||||||||
Companies under common control | |||||||||||||||||||||||||||||||||||||||
Louis Dreyfus Company Brasil S.A. | - | 5,144 | 5,144 | (534,596) | - | (534,596) | |||||||||||||||||||||||||||||||||
Louis Dreyfus Company Suisse S.A. | 529,760 | - | 529,760 | - | (4,984) | (4,984) | |||||||||||||||||||||||||||||||||
Term Commodities Inc. | - | - | - | (1,476) | - | (1,476) | |||||||||||||||||||||||||||||||||
529,760 | 5,144 | 534,904 | (536,072) | (4,984) | (541,056) | ||||||||||||||||||||||||||||||||||
Jointly-controlled entity | |||||||||||||||||||||||||||||||||||||||
Teag-Terminal Exp. Açúcar Guarujá Ltda. | 877 | - | 877 | (1,076) | - | (1,076) | |||||||||||||||||||||||||||||||||
877 | - | 877 | (1,076) | - | (1,076) | ||||||||||||||||||||||||||||||||||
06.30.19 | 530,637 | 5,144 | 535,781 | (537,148) | (4,984) | (542,132) | |||||||||||||||||||||||||||||||||
35
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Consolidated | ||||||||||||||||||||||||||
Profit (loss) | ||||||||||||||||||||||||||
Income | Expenses | |||||||||||||||||||||||||
Interest and | Interest and | |||||||||||||||||||||||||
exchange rate | exchange rate | Total | ||||||||||||||||||||||||
Sales | changes | Total income | Sales | changes | expenses | |||||||||||||||||||||
Companies under common control | ||||||||||||||||||||||||||
LDC Trading and Services Co.S.A. | - | - | - | (370) | (26) | (396) | ||||||||||||||||||||
Louis Dreyfus Company Brasil S.A. | 17 | - | 17 | (1,094,483) | - | (1,094,483) | ||||||||||||||||||||
Louis Dreyfus Company Suisse S.A. | 1,548,182 | 10,207 | 1,558,389 | (78,112) | - | (78,112) | ||||||||||||||||||||
Macrofértil Indústria e Comércio de Fertilizantes Ltda. | - | - | - | (185) | - | (185) | ||||||||||||||||||||
Term Commodities Inc. | - | 71 | 71 | (4,088) | - | (4,088) | ||||||||||||||||||||
1,548,199 | 10,278 | 1,558,477 | (1,177,238) | (26) | (1,177,264) | |||||||||||||||||||||
Jointly-controlled entity | ||||||||||||||||||||||||||
Teag-Terminal Exp. Açúcar Guarujá Ltda. | - | - | - | (3,340) | - | (3,340) | ||||||||||||||||||||
- | - | - | (3,340) | - | (3,340) | |||||||||||||||||||||
06.30.20 | 1,548,199 | 10,278 | 1,558,477 | (1,180,578) | (26) | (1,180,604) | ||||||||||||||||||||
Companies under common control | ||||||||||||||||||||||||||
LDC Trading and Services Co.S.A. | - | 3 | 3 | (274) | - | (274) | ||||||||||||||||||||
Louis Dreyfus Company Brasil S.A. | - | 21,546 | 21,546 | (628,332) | - | (628,332) | ||||||||||||||||||||
Louis Dreyfus Company Suisse S.A. | 837,013 | - | 837,013 | (1,837) | (22,002) | (23,839) | ||||||||||||||||||||
LDC Ethanol Interior Merchandising | - | 1 | 1 | - | - | - | ||||||||||||||||||||
Macrofértil Indústria e Comércio de Fertilizantes Ltda. | - | - | - | (674) | - | (674) | ||||||||||||||||||||
Term Commodities Inc. | - | - | - | (1,597) | (4) | (1,601) | ||||||||||||||||||||
837,013 | 21,550 | 858,563 | (632,714) | (22,006) | (654,720) | |||||||||||||||||||||
Jointly-controlled entity | ||||||||||||||||||||||||||
Teag-Terminal Exp. Açúcar Guarujá Ltda. | 1,941 | - | 1,941 | (1,324) | (1) | (1,325) | ||||||||||||||||||||
1,941 | - | 1,941 | (1,324) | (1) | (1,325) | |||||||||||||||||||||
06.30.19 | 838,954 | 21,550 | 860,504 | (634,038) | (22,007) | (656,045) | ||||||||||||||||||||
a) Compensation of key management personnel
The compensation of officers and other key management personnel for the period is as follows:
Company and Consolidated
06.30.20 | 06.30.19 | ||
Short-term benefits | 6,640 | 6,453 | |
Long-term benefits | 2,302 | 1,458 | |
8,942 | 7,911 | ||
The short-term benefits of key management personnel comprise salaries, social security contributions, pension fund contributions, social charges, profit sharing and short-term performance bonus. Long-term benefits include performance bonus and deferred benefits that expired in each financial statements.
21. EQUITY
Capital
The changes in capital are as follows:
Shares | In thousands of Brazilian reais - R$ | |||||||||||
Common | Capital | Capital reserve | ||||||||||
03.31.20 | 1.020.429.426 | 6.077.674 | 1.353.937 | |||||||||
06.30.20 | 1.020.429.426 | 6.077.674 | 1.353.937 | |||||||||
36
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
22. NET REVENUE AND COST OF SALES AND SERVICES
Company
Three-month period ended
06.30.20 06.30.19
Consolidated
Three-month period
ended
06.30.20 06.30.19
Gross revenue | ||||||||
Domestic market | ||||||||
Sugar | 47,709 | 16,463 | 60,846 | 39,582 | ||||
Ethanol | 115,901 | 425,102 | 246,356 | 715,750 | ||||
Energy | 54,008 | 52,992 | 130,770 | 122,160 | ||||
Other | 393 | 938 | 12,502 | 5,616 | ||||
218,011 | 495,495 | 450,474 | 883,108 | |||||
Foreign market | ||||||||
Sugar | 213,054 | 34,489 | 648,238 | 252,806 | ||||
Ethanol | 13,850 | - | 232,886 | 86,229 | ||||
Other (a) | 515,200 | 529,759 | 1,397,168 | 623,540 | ||||
742,104 | 564,248 | 2,278,292 | 962,575 | |||||
960,115 | 1,059,743 | 2,728,766 | 1,845,683 | |||||
Taxes (b) | (23,054) | (57,407) | (57,853) | (126,516) | ||||
Sales rebates | (1,231) | (300) | (1,287) | (803) | ||||
Net revenue | 935,830 | 1,002,036 | 2,669,626 | 1,718,364 | ||||
Cost of sales and services (c) | ||||||||
Domestic market | ||||||||
Sugar | (37,433) | (19,238) | (48,857) | (30,361) | ||||
Ethanol | (113,951) | (309,481) | (234,845) | (526,742) | ||||
Energy | (10,666) | (13,447) | (71,274) | (74,523) | ||||
Other | (1,791) | (1,335) | (18,260) | (7,888) | ||||
(163,841) | (343,501) | (373,236) | (639,514) | |||||
Foreign market | ||||||||
Sugar (d) | (139,286) | (31,088) | (524,619) | (224,373) | ||||
Ethanol (d) | (11,475) | - | (168,698) | (88,789) | ||||
Other (a) | (538,475) | (534,610) | (1,405,730) | (628,349) | ||||
(689,236) | (565,698) | (2,099,047) | (941,511) | |||||
Gains on changes in fair value less estimated costs to sell | ||||||||
biological assets | ||||||||
Sugar | 103,553 | 10,002 | 123,906 | 19,842 | ||||
Ethanol | 73,496 | 61,506 | 89,923 | 73,555 | ||||
177,049 | 71,508 | 213,829 | 93,397 | |||||
(676,028) | (837,691) | (2,258,454) | (1,487,628) | |||||
- Amounts relating to the export of commodities.
- Include government grants, which reduced the taxable base on sales by R$13,006, in Company, in the period ended June 30, 2020 (R$26,834 as at June 30, 2019).
- Include PIS and COFINS credits in the amount of R$2,171, in Company, and R$4,503, in Consolidated, in the period ended June 30, 2020 (R$4,471 and R$8,199, as at June 30, 2019, respectively), as prescribed by article 3, of Law 10637/02, which addresses the non-cumulativeness of PIS/PASEP; and article 3, of Law 10833/03, which addresses the non- cumulativeness of COFINS.
- Include REINTEGRA credits, in the amount of R$121, in Company, and R$453, in Consolidated, in the period ended June 30, 2020 (R$2,319 and R$2,501, as at June 30, 2019, respectively), as set forth in article 21, of Law 13043, of November 13, 2014, which addresses the REINTEGRA reintroducing.
37
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
23. EXPENSES BY NATURE
The information on the nature of cost of sales and services and general, administrative and selling expenses is as follows:
Company | Consolidated | ||||||
Three-month period | Three-month period | ||||||
ended | ended | ||||||
06.30.20 | 06.30.19 | 06.30.20 | 06.30.19 | ||||
Cost of sales and services | |||||||
Personnel (*) | (49,163) | (64,654) | (117,709) | (114,618) | |||
Depreciation and amortization (**) | (218,131) | (233,363) | (448,243) | (430,344) | |||
Raw materials and inputs, net of taxes: | |||||||
Raw materials | (29,701) | (54,642) | (231,425) | (230,988) | |||
Inputs and services | (13,941) | (4,793) | (45,893) | (31,659) | |||
Products for resale | (542,141) | (551,747) | (1,629,013) | (773,416) | |||
(585,783) | (611,182) | (1,906,331) | (1,036,063) | ||||
Gains on changes in fair value less estimated costs to sell biological | |||||||
assets | 177,049 | 71,508 | 213,829 | 93,397 | |||
(676,028) | (837,691) | (2,258,454) | (1,487,628) | ||||
General, administrative and selling expenses | |||||||
Personnel (*) | (6,117) | (25,701) | (32,068) | (42,999) | |||
Depreciation | (2,834) | (2,729) | (5,506) | (5,811) | |||
Freight | (15,773) | (5,973) | (54,808) | (26,911) | |||
Services | (12,387) | (11,734) | (31,496) | (19,523) | |||
Shipping expenses | (859) | (259) | (22,919) | (5,392) | |||
Other | (4,530) | (6,241) | (7,870) | (8,601) | |||
(42,500) | (52,637) | (154,667) | (109,237) | ||||
- As at June 30, 2020, the personnel expenses, in Company and Consolidated, comprise R$53,592 and R$145,899, respectively (R$88,229 and R$153,445 as at June 30, 2019), and R$1,688 and R$3,878 (R$2,126 and R$4,172 as at June 30, 2019) relating to INSS contribution, respectively.
(**) Includes biological asset and agricultural produce.
38
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
24. FINANCE INCOME (EXPENSES)
Company | Consolidated | |||||||||||||||
Three-month period | Three-month period | |||||||||||||||
ended | ended | |||||||||||||||
Finance income | 06.30.20 | 06.30.19 | 06.30.20 | 06.30.19 | ||||||||||||
Discounts obtained | 442 | 24 | 802 | 169 | ||||||||||||
Revenue from fixed income short-term investments | 814 | 2,641 | 1,786 | 5,553 | ||||||||||||
Interest | 3,887 | 3,660 | 5,424 | 5,327 | ||||||||||||
Other | 39 | 843 | 500 | 1,918 | ||||||||||||
5,182 | 7,168 | 8,512 | 12,967 | |||||||||||||
Finance costs | ||||||||||||||||
Interest | (81,770) | (73,785) | (156,936) | (145,925) | ||||||||||||
Discounts granted | - | (37) | (7) | (37) | ||||||||||||
Tax on Financial Transactions (IOF) | (833) | (506) | (1,368) | (1,481) | ||||||||||||
Tax on Financial Transactions (IOF) - loan | - | (7) | (173) | (1,109) | ||||||||||||
Other | (582) | (133) | (1,387) | (402) | ||||||||||||
Taxes on revenue (PIS and COFINS) on finance income | (197) | (321) | (350) | (577) | ||||||||||||
(83,382) | (74,789) | (160,221) | (149,531) | |||||||||||||
Derivatives | ||||||||||||||||
Commodities derivatives - Commercial transactions | (43,180) | 51,983 | 5,022 | 19,715 | ||||||||||||
Commodities derivatives - Financial transactions | 46,160 | (10,740) | 46,160 | (10,740) | ||||||||||||
Interest rate derivatives - Libor sw ap | - | - | (1,806) | 304 | ||||||||||||
2,980 | 41,243 | 49,376 | 9,279 | |||||||||||||
Exchange rate changes | (171,329) | 40,866 | (383,428) | 76,284 | ||||||||||||
Finance costs | (246,549) | 14,488 | (485,761) | (51,001) | ||||||||||||
25. OTHER OPERATING INCOME (EXPENSES)
Company
Three-month period ended
06.30.20 06.30.19
Consolidated
Three-month period ended
06.30.20 06.30.19
Recognition of provision for tax, labor, civil and environmental contingencies | (2,486) | (4,784) | (8,642) | (15,370) | ||||
Contratual fines and indemnities | (4,279) | (8,091) | (15,381) | (16,636) | ||||
Tax expenses | (1,122) | (2,075) | (3,268) | (1,566) | ||||
Reversal of Impairment of fixed assets | 141 | 376 | 260 | 1,704 | ||||
Gains (losses) on sale of property, plant and equipment | 85 | 504 | 864 | 5,428 | ||||
Impairment of assets held for sale | 119 | (21,060) | 119 | (21,114) | ||||
Reversal (recognition) of estimated losses on doubtful accounts | (7) | (389) | 231 | (590) | ||||
Provision for other losses | (27) | (122) | (3,762) | (58,740) | ||||
Other operating expenses, net | 1,014 | 966 | 1,561 | 1,759 | ||||
Total other operating income (expenses), net | (6,562) | (34,675) | (28,018) | (105,125) | ||||
Total other operating income | 6,348 | 3,497 | 8,414 | 8,409 | ||||
Total other operating expenses | (12,910) | (38,172) | (36,432) | (113,534) | ||||
39
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
26. LOSS PER SHARE
The basic and diluted loss per share was calculated based on the loss attributable to the Biosev's owners divided by the weighted average number of outstanding common shares in the period.
Loss for the year attributable to the Company's ow ners
Weighted average number of shares used to calculate basic and diluted earnings per share
Total basic and diluted loss per share
Company | Consolidated | |||||||||||||
Three-month period | Three-month period | |||||||||||||
ended | ended | |||||||||||||
06.30.20 | 06.30.19 | 06.30.20 | 06.30.19 | |||||||||||
(281,213) | (168,821) | (281,213) | (168,821) | |||||||||||
474,006,366 | 386,367,962 | 474,006,366 | 386,367,962 | |||||||||||
(0.59327) | (0.43694) | (0.59327) | (0.43694) | |||||||||||
27. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS I - Risk management
The Company is exposed to risks arising from its operations and considers market, credit, liquidity, and capital risks as the most significant risks to which it is exposed.
The objective of the Company's risk management program is to hedge its results against fluctuations in sugar, ethanol and electric power prices, foreign exchange and interest rates. These risks are managed using hedging financial instruments available in the financial market, such as: swaps and interest rate futures; currency forwards, futures and options; and commodity forwards, swaps, futures and options. Transactions carried out in the over-the-counter market are contracted through low-risk domestic and foreign banks. Transactions contracted on the stock exchange market are mainly traded in futures and options markets at the New York Commodities Exchange (NYSE: ICE), Chicago Commodities Exchange (NYSE: CME) and Brasil Bolsa Balcão (B3).
The use of these instruments is guided by the Financial and Risk Management Policy approved and reviewed by the Board of Directors on January 13, 2020. Additionally, the Company does not carry out transactions with any type of leverage, as well as does not have transactions with exotic derivatives.
The risk management policies, practices and instruments are oversight by the Executive Committee and the Strategic Committee (the body that supports the Company's Board of Directors).
The Executive Committee has the following responsibilities before the Board of Directors: (i) monitor the compliance with the policy and report eventual non-compliances; (ii) inform about the indebtness of the Company and its subsidiaries, as well as the related debt instruments; (iii) inform about the burdens on the assets of the Company and its subsidiaries; and (iv) monitor the risk management instruments of the Company and its subsidiaries.
The Risk Management Department is subject to the Chief Financial Officer and is responsible for the calculation, measurement, analysis and monitoring of the exposure, by issuing daily reports based on which the necessary corrective measures are taken. It is also responsible for monitoring the compliance with the risk management policies.
27.1 Market risk
The Company is mainly exposed to risks related to foreign exchange, interest rate and agricultural commodity price fluctuations. In order to hedge against these market risks, the Company uses various derivative financial instruments, including:
- Foreign exchange forwards, options and futures to hedge fair value and cash flow items against exchange rate changes;
- Interest rate futures to supplement the hedging of such items;
- Interest rate swaps to mitigate LIBOR fluctuation risk;
40
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
- Commodity forwards, swaps, futures and options to hedge inventory and future agricultural commodity delivery transactions.
The parameters used to manage these risks are based on hedging strategy monitoring tools, such as sensitivity analysis, stress tests, and a hedging scale, aimed at securing the future amount of sugar and ethanol sales, including the effects from foreign exchange rate, as well as interest rate exposure.
As at June 30, 2020, the assets and liabilities relating to the derivative transactions are broken down as follows:
Company | Consolidated | |||||||||||||||
06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | |||||||||||||
Exchange risk management (Note 27.1.1) | (240.920) | (343.960) | (240.920) | (343.959) | ||||||||||||
Interest rate risk management (Note 27.1.2) | - | - | (30.702) | (27.963) | ||||||||||||
Agricultural commodity risk management (Note 27.1.3) | (4.204) | (5.441) | (1.945) | 50.155 | ||||||||||||
(245.124) (349.401) (273.567) (321.767) | ||||||||||||||||
Current assets | 93.131 | 225.787 | 97.252 | 225.787 | ||||||||||||
Non-current assets | - | - | - | 55.885 | ||||||||||||
Current liabilities | (338.255) | (575.188) | (353.256) (586.843) | |||||||||||||
Non-current liabilities | - | - | (17.563) | (16.596) | ||||||||||||
27.1.1 Foreign exchange risk management
Because the Company's functional currency is the Brazilian real (R$), the foreign currency-denominated operations are exposed to the foreign exchange risk. Foreign exchange positions are managed based on the Financial and Risk Management Policy, approved by the Company's Board of Directors on January 13, 2020. The Company carries out transactions with currency derivatives in order to reduce variability in its profit or loss due to the existence of US dollar denominated net cash flows from exports, costs and debts.
The Company may also contract derivative financial instruments to hedge its foreign exchange exposure that may impact assets and liabilities, as set forth in the policy.
The Company carries out transactions with interest rate derivatives traded on the B3 (one-day DI futures) in order to supplement foreign exchange rate hedges contracted under foreign exchange contracts traded on said exchange - future dollar financial instruments (DOL) and exchange coupon futures (DDI)). The consolidated use of such future contracts aims at having effects similar to those of one single DOL futures contract. This strategy is adopted by the Company without leverage. This is necessary because an individually traded DOL future contract does not have significant liquidity for terms above three months and, therefore, could not meet the Company's foreign exchange hedging requirements.
This practice is regulated by the B3 and has been widely disseminated among future market participants in Brazil for over a decade.
41
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
The table below shows the Company's NDF, DOL, DI and DDI forward currency sale instruments, used for purposes of hedging foreign exchange risk and respective results:
Company and Consolidated | |||||||||||||||||||||||||
Notional value | |||||||||||||||||||||||||
Average exchange | |||||||||||||||||||||||||
rate | Foreign currency | Domestic currency (*) | Fair value | ||||||||||||||||||||||
06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | ||||||||||||||||||
(Sale) purchase | (Sale) purchase | ||||||||||||||||||||||||
Outstanding forw ard contracts - NDF US Dollar | |||||||||||||||||||||||||
Hedge Accounting - Cash Flow | |||||||||||||||||||||||||
Sale | 4,8604 | 4,2685 | (315.213) | (380.500) | (1.532.064) | (1.624.177) | (187.770) | (359.644) | |||||||||||||||||
(315.213) | (380.500) | (1.532.064) | (1.624.177) | (187.770) | (359.644) | ||||||||||||||||||||
Non- Hedge Acccounting | |||||||||||||||||||||||||
Sale | 4,5161 | 4,6227 | (144.787) | (314.500) | (653.866) | (1.453.833) | (137.903) | (190.392) | |||||||||||||||||
Purchase | 5,2530 | 4,7351 | 405.500 | 425.000 | 2.130.078 | 2.012.401 | 84.813 | 205.822 | |||||||||||||||||
260.713 | 110.500 | 1.476.212 | 558.568 | (53.090) | 15.430 | ||||||||||||||||||||
Futures B3 - Non-hedge Accounting | |||||||||||||||||||||||||
DOL - dollar futures | 5,4760 | 5,1987 | 48.750 | 54.750 | 266.955 | 284.629 | (1.981) | 1.443 | |||||||||||||||||
DDI - future exchange coupon | (58.304) | (85.160) | (319.272) | (442.721) | 1.817 | (1.511) | |||||||||||||||||||
DI - 1 day: | 42.955 | 70.725 | 235.222 | 367.677 | 103 | 322 | |||||||||||||||||||
33.401 | 40.315 | 182.905 | 209.585 | (60) | 254 | ||||||||||||||||||||
(240.920) | (343.960) | ||||||||||||||||||||||||
(*) Convenience conversion.
27.1.2 Interest rate risk management
The Company uses Libor derivatives to hedge against interest rate fluctuations. These derivatives are traded on the Brazilian over-the-counter market with low-risk banks as counterparties, and are registered with CETIP S.A. - Balcão Organizado de Ativos e Derivativos (Brazilian organized OTC market), as required by prevailing legislation.
The table below shows the Company's Libor swap instruments with receipt of Libor interest and payment of fixed rates and presents the derivatives used for purposes of hedging Libor interest risk and respective results:
Consolidated | ||||||||||||||||||||||||
Notional value | ||||||||||||||||||||||||
Fixed average rate - | ||||||||||||||||||||||||
% | Foreign currency | Domestic currency (*) | Fair value | |||||||||||||||||||||
06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | |||||||||||||||||
Hedge Accounting | ||||||||||||||||||||||||
Outstanding position: | ||||||||||||||||||||||||
Less than 1 year | 3.15% | 3.15% | 39,967 | 39,967 | 218,857 | 207,775 | (13,139) | (11,367) | ||||||||||||||||
1 to 2 years | 3.15% | 3.15% | 39,967 | 39,967 | 218,857 | 207,775 | (10,870) | (10,659) | ||||||||||||||||
2 to 5 years | 3.15% | 3.15% | 56,002 | 56,002 | 306,665 | 291,136 | (6,693) | (5,937) | ||||||||||||||||
135,936 | 135,936 | 744,379 | 706,686 | (30,702) | (27,963) | |||||||||||||||||||
(*) Convenience conversion.
42
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
27.1.3 Agricultural commodity risk management
The Company carries out transactions with commodity derivatives (sugar and ethanol) in order to reduce the impact of the changes in the market prices considering that these changes may significantly affect the Company's future sales value. These risks are managed according to the Company's Financial and Risk Management Policy and the hedge strategy monitoring tool which determines the hedge volume and timeframe.
The Company's swaps, forwards, futures and options in the period used for commodity risk hedging and the related results are as follows:
Company | |||||||||||||||||||
Notional value | |||||||||||||||||||
Foreign currency | Domestic currency (*) | Fair value | |||||||||||||||||
06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | ||||||||||||||
Sugar futures - ICE | |||||||||||||||||||
Hedge Accounting - Cash Flow | (112,033) | (138,660) | (613,492) | (720,852) | 2,687 | (2,026) | |||||||||||||
Hedge Accounting - Fair Value | 132,652 | 132,652 | 726,403 | 689,618 | (5,571) | 1,600 | |||||||||||||
Non- Hedge Acccounting | 56,105 | (5,365) | 307,229 | (27,889) | 5,245 | (6,159) | |||||||||||||
76,724 | (11,373) | 420,140 | (59,123) | 2,361 | (6,585) | ||||||||||||||
Sugar options - ICE | |||||||||||||||||||
Non- Hedge Acccounting | - | 2,359 | - | 12,264 | - | 606 | |||||||||||||
- | 2,359 | - | 12,264 | - | 606 | ||||||||||||||
Sugar options - OTC | |||||||||||||||||||
Non- Hedge Acccounting | (9,325) | (10,545) | (51,062) | (54,820) | (6,565) | (836) | |||||||||||||
(9,325) | (10,545) | (51,062) | (54,820) | (6,565) | (836) | ||||||||||||||
NDF sugar - OTC | |||||||||||||||||||
Non- Hedge Acccounting | - | (9,822) | - | (51,062) | - | 1,156 | |||||||||||||
- | (9,822) | - | (51,062) | - | 1,156 | ||||||||||||||
Ethanol futures - B3
Non- Hedge Acccounting
Sugar futures - ICE
- | (425) | - | (2,211) | - | 218 | |||||||||||||
- | (425) | - | (2,211) | - | 218 | |||||||||||||
(4,204) | (5,441) | |||||||||||||||||
Consolidated | ||||||||||||||||||
Notional value | ||||||||||||||||||
Foreign currency | Domestic currency (*) | Fair value | ||||||||||||||||
06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 |
Hedge Accounting - Cash Flow | (112,033) | (138,660) | (613,492) | (720,852) | 2,687 | (2,026) | ||||||
Hedge Accounting - Fair Value | 132,652 | 132,652 | 726,403 | 689,618 | (5,571) | 1,600 | ||||||
Non- Hedge Acccounting | 56,105 | (5,365) | 307,229 | (27,889) | 5,245 | (6,159) | ||||||
76,724 | (11,373) | 420,140 | (59,123) | 2,361 | (6,585) | |||||||
Sugar Sales Agreements | ||||||||||||
Hedge Accounting - Fair Value | (132,652) | (132,652) | (726,403) | (689,618) | 4,121 | 55,885 | ||||||
(132,652) | (132,652) | (726,403) | (689,618) | 4,121 | 55,885 | |||||||
Sugar options - ICE | ||||||||||||
Non- Hedge Acccounting | - | 2,359 | - | 12,264 | - | 606 | ||||||
- | 2,359 | - | 12,264 | - | 606 | |||||||
Sugar options - OTC | ||||||||||||
Non- Hedge Acccounting | (3,313) | (14,035) | (18,144) | (72,964) | (1,862) | (1,125) | ||||||
(3,313) | (14,035) | (18,144) | (72,964) | (1,862) | (1,125) | |||||||
NDF sugar - OTC | ||||||||||||
Non- Hedge Acccounting | (9,325) | (9,822) | (51,062) | (51,062) | (6,565) | 1,156 | ||||||
(9,325) | (9,822) | (51,062) | (51,062) | (6,565) | 1,156 | |||||||
Ethanol futures - B3 | ||||||||||||
Non- Hedge Acccounting | - | (425) | - | (2,211) | - | 218 | ||||||
- | (425) | - | (2,211) | - | 218 | |||||||
(1,945) | 50,155 | |||||||||||
(*) Convenience conversion.
43
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
27.2 Credit risk
The credit risk is managed through the careful analysis of the customer portfolio, the definition of credit limits, and the ongoing control of outstanding positions. In conformity with the Company's credit policy, using a risk assessment methodology, the Company adopted balanced scorecard techniques. The Company adopts hedging instruments, such as collaterals, pledges and guarantees, to mitigate potential credit exposures. Historically, the Company does not record significant losses in trade receivables.
27.3 Liquidity risk
The Company operates with a liquidity level considered sufficient for its operations and uses a number of sources of funds to finance its activities. In order to cover possible liquidity deficiencies or mismatches between cash and cash equivalents with short-term maturities, the Company has good relationship with first-class banks, in Brazil or abroad, as well as a credit line with its parent. Moreover, the products manufactured by the Company are highly liquid and can be easily sold to generate cash or also be provided as a guarantee for financial transactions. In addition, part of the investments, especially those related to sugarcane plantation treatments, is supported by short-term financing and will be realized in the following harvest campaign.
27.3.1 Liquidity and interest rate tables
The tables below show in detail the expected maturity of the Group's financial liabilities:
Company | |||||||||||||||||
Less than 1 year | 1 to 5 years | Over 5 years | Total | ||||||||||||||
As at June 30, 2020 | |||||||||||||||||
Borrow ings and financing | 421.054 | 2.638.763 | 111.494 | 3.171.311 | |||||||||||||
Lease liability | 200.569 | 454.793 | 77.023 | 732.385 | |||||||||||||
Derivative financial instruments | 338.255 | - | - | 338.255 | |||||||||||||
Trade payables | 316.809 | 4.622 | - | 321.431 | |||||||||||||
Accrued payroll and related taxes | 56.607 | - | - | 56.607 | |||||||||||||
Taxes payable | 21.203 | 18.324 | - | 39.527 | |||||||||||||
Other payables | 68.228 | 65.195 | - | 133.423 | |||||||||||||
1.422.725 | 3.181.697 | 188.517 | 4.792.939 | ||||||||||||||
As at March 31, 2020 | |||||||||||||||||
Borrow ings and financing | 2.935.559 | 67.484 | - | 3.003.043 | |||||||||||||
Lease liability | 215.257 | 444.809 | 72.048 | 732.114 | |||||||||||||
Derivative financial instruments | 575.188 | - | - | 575.188 | |||||||||||||
Trade payables | 309.104 | 5.733 | - | 314.837 | |||||||||||||
Accrued payroll and related taxes | 47.218 | - | - | 47.218 | |||||||||||||
Taxes payable | 21.314 | 18.501 | - | 39.815 | |||||||||||||
Other payables | 80.594 | 86.047 | - | 166.641 | |||||||||||||
4.184.234 | 622.574 | 72.048 | 4.878.856 | ||||||||||||||
Consolidated | |||||||||||||||||
Less than 1 year | 1 to 5 years | Over 5 years | Total | ||||||||||||||
As at June 30, 2020 | |||||||||||||||||
Borrow ings and financing | 1.168.611 | 6.478.724 | 114.573 | 7.761.908 | |||||||||||||
Lease liability | 477.464 | 1.067.174 | 148.545 | 1.693.183 | |||||||||||||
Derivative financial instruments | 353.256 | 17.563 | - | 370.819 | |||||||||||||
Trade payables | 690.168 | 4.857 | - | 695.025 | |||||||||||||
Accrued payroll and related taxes | 110.115 | - | - | 110.115 | |||||||||||||
Taxes payable | 69.442 | 18.324 | - | 87.766 | |||||||||||||
Other payables | 114.509 | 135.643 | - | 250.152 | |||||||||||||
2.983.565 | 7.722.285 | 263.118 | 10.968.968 | ||||||||||||||
As at March 31, 2020 | |||||||||||||||||
Borrow ings and financing | 7.225.234 | 96.191 | - | 7.321.425 | |||||||||||||
Lease liability | 498.932 | 1.029.154 | 153.183 | 1.681.269 | |||||||||||||
Derivative financial instruments | 586.843 | 16.596 | - | 603.439 | |||||||||||||
Trade payables | 798.903 | 5.965 | - | 804.868 | |||||||||||||
Accrued payroll and related taxes | 90.483 | - | - | 90.483 | |||||||||||||
Taxes payable | 75.152 | 18.501 | - | 93.653 | |||||||||||||
Other payables | 118.051 | 167.247 | - | 285.298 | |||||||||||||
9.393.598 | 1.333.654 | 153.183 | 10.880.435 | ||||||||||||||
44
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
27.4 Capital risk
The Company manages its capital structure in order to safeguard a continuous return to the Company's shareholders. Company monitors capital through financial leverage index analysis; these indexes include adjusted net debt to adjusted EBITDA ratio. In turn, the net debt corresponds to total borrowings and financing (including short- and long-term borrowings and financing), less cash, cash equivalents, short-term investments and highly liquid inventory (ethanol, sugar and allowance for negative inventory margin).
The Company allocates the Libor swap contracts (see Note 27.1.2) to the adjusted net debt for capital risk analysis purposes.
The Company may change its capital structure, in conformity with economic and financial conditions, aiming at optimizing its financial leverage and/or debt management.
27.5 Margin calls
Derivative transactions in commodity exchanges (ICE and B3) require an initial margin call in guarantee.
To trade on the ICE, the margin call required, as at June 30, 2020, is R$32,652 (R$7,376 as at March 31, 2020), fully deposited by the Company's in cash, through fiduciary agent Term Commodities Inc., a company under common control.
To trade on the B3, the margin call required, as at June 30, 2020, is R$13,716 (R$26,502 as at March 31, 2020), deposited as Bank Deposit Certificate (CDB), in the amount of R$10,000 and R$11,371, in current account.
As at June 30, 2020, the Company's transactions in the over-the-counter market did not require an initial margin call in guarantee.
27.6 Categories of financial instruments
The financial instruments recorded in the balance sheet, such as cash and cash equivalents and borrowings and financing, are stated at contractual values, which approximate their fair values due to their short terms and/or characteristics.
The fair value of financial instruments not traded in active markets (for example, over-the-counter derivatives) is determined using valuation techniques. The Company uses several methods and makes assumptions that are based on existing market conditions at the end of the interim financial statements. The fair value of foreign exchange forwards is determined based on forward exchange rates quoted at the end of the interim financial statements.
The use of different market inputs and/or valuation techniques might result in amounts different from the recognized realizable value of financial instruments.
Classification | Company | Consolidated | ||||||||
CPC 48 / IFRS 9 | 06.30.20 | 03.31.20 | 06.30.20 | 03.31.20 | ||||||
Financial assets: | ||||||||||
Cash and cash equivalents (Note 3) | Amortized cost | 114.802 | 396.124 | 359.383 | 1.174.943 | |||||
Short-term investments and debentures (Note 4) | Amortized cost | 58.701 | 42.052 | 69.858 | 52.245 | |||||
Trade receivables (Note 5) | Amortized cost | 245.044 | 211.537 | 462.710 | 216.242 | |||||
Derivatives designated as fair value hedge or not (Note 27) | VJR | 90.444 | 225.676 | 94.564 | 281.561 | |||||
Derivatives designated as cash flow hedge (Note 27) | VJORA | 2.687 | 111 | 2.688 | 111 | |||||
Financial liabilities: | - | - | ||||||||
Borrow ings and financing (Note 16) | Amortized cost | 3.171.311 | 3.003.043 | 7.761.908 | 7.321.425 | |||||
Lease liability (Note 12) | Amortized cost | 732.385 | 732.114 | 1.693.183 | 1.681.269 | |||||
Trade payables (Note 17) | Amortized cost | 321.431 | 314.837 | 695.025 | 804.868 | |||||
Other financial liabilities | Amortized cost | 229.557 | 253.674 | 448.033 | 469.434 | |||||
Derivatives designated as fair value hedge or not (Note 27) | VJR | 65.583 | 361.781 | 67.444 | 389.743 | |||||
Derivatives designated as cash flow hedge (Note 27) | VJORA | 272.672 | 213.407 | 303.375 | 213.696 | |||||
45
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
27.7 Measurement at fair value recognized in balance sheet
CPC 40 (R1) - Instrumentos Financeiros: Evidenciação/IFRS 7 - Financial Instruments: Disclosure defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the primary or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. CPC 40 (R1)/IFRS 7 also establishes a three-level fair value hierarchy, which prioritizes inputs for fair value measurement by an entity in order to maximize the use of observable data and minimize the use of unobservable data. CPC
40 (R1)/IFRS 7 describes the three levels of inputs that should be used to measure fair value, which are the following:
- Level 1 - Quoted prices (unadjusted) in active markets for identical assets and liabilities.
- Level 2 - Inputs other than the data included in Level 1, where prices are quoted (unadjusted).
Fair value measurements of Level 2 are obtained based on other variables besides quoted prices included in Level 1, which are directly or indirectly observable for an asset or liability.
- Level 3 - Inputs for the asset or liability that are not based on observable market data (unobservable inputs) because market activity is insignificant or does not exist.
The Company's financial assets and liabilities measured at fair value on a recurring basis and subject to disclosure as required by CPC 40 (R1)/IFRS 7, as at June 30, 2020, are as follows:
Company | Consolidated | ||||||||||||||||||||||||
06.30.20 | 06.30.20 | ||||||||||||||||||||||||
Level 1 | Level 2 | Total | Level 1 | Level 2 | Total | ||||||||||||||||||||
Financial assets at fair value through profit or loss | |||||||||||||||||||||||||
Derivative financial assets | 2,374 | 90,757 | 93,131 | 2,374 | 94,878 | 97,252 | |||||||||||||||||||
2,374 | 90,757 | 93,131 | 2,374 | 94,878 | 97,252 | ||||||||||||||||||||
Financial liabilities at fair value through profit or loss | |||||||||||||||||||||||||
Derivative financial liabilities | (2,435) | (335,820) | (338,255) | (2,434) | (368,385) | (370,819) | |||||||||||||||||||
(2,435) | (335,820) | (338,255) | (2,434) | (368,385) | (370,819) | ||||||||||||||||||||
Company | Consolidated | ||||||||||||||||||||||||
03.31.20 | 03.31.20 | ||||||||||||||||||||||||
Level 1 | Level 2 | Total | Level 1 | Level 2 | Total | ||||||||||||||||||||
Financial assets at fair value through profit or loss | |||||||||||||||||||||||||
Derivative financial assets | 15,885 | 209,902 | 225,787 | 15,886 | 265,786 | 281,672 | |||||||||||||||||||
15,885 | 209,902 | 225,787 | 15,886 | 265,786 | 281,672 | ||||||||||||||||||||
Financial liabilities at fair value through profit or loss | |||||||||||||||||||||||||
Derivative financial liabilities | (22,000) | (553,188) | (575,188) | (21,999) | (581,440) | (603,439) | |||||||||||||||||||
(22,000) | (553,188) | (575,188) | (21,999) | (581,440) | (603,439) | ||||||||||||||||||||
27.8 Derivative and non-derivative financial instruments with the application of hedge accounting
In accordance with accounting practices adopted in Brazil, derivative financial instruments are accounted for at fair value through profit or loss, unless a derivative is designated for hedge accounting. A derivative only qualifies for hedge accounting when all the conditions set out by CPC 48/IFRS 9 are met. The adoption of hedge accounting is optional and aims at recognizing gains or losses on derivatives and debts only when the hedged item is realized on an accrual basis and, therefore, reducing the volatility of gains or losses from the mark-to-market of derivatives.
The Company applies hedge accounting to account for part of its derivative and non-derivative financial instruments.
27.8.1 Cash flow hedge
The cash flow hedge is characterized by the protection of a recognized liability (debt) and highly probable transactions (exports of sugar and ethanol expressed in US dollars) under CPC 48/IFRS 9, items 6.3.3/9 6.2.2. The hedge instruments are described below:
- Recognized liability hedge: swap contracts subject to the Libor interest rate contracted to mitigate the effects from interest rate changes of the long-term debts, in which case the respective exposure is subject to a fixed interest rate; and
46
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
- Highly probable transaction hedge: i) sugar futures contracts for purposes of price risk hedge; and ii) currency forward contracts (NDF) and US dollar-denominated debts (Natural HACC), both contracted to protect against exchange rate changes in the revenue from exports.
27.8.2 Fair value hedge
Such hedge comprises the use of "sugar futures" derivative instruments to protect against changes in fair value in connection with a sugar sales agreement.
27.8.3 Discontinued hedge accounting
As at March 31, 2019, the Company discontinued the revenue hedge accounting program (Natural HACC) with respect to the debts already designated. Such discontinuity resulted from the change in the Company's foreign exchange risk management, which aimed to offset the exchange rate changes of the debts against equity, which will be directly recorded in the finance income (costs) to be offset against the long positions expressed in foreign currency using derivative financial instruments - also recognized in finance income (costs) (CPC 48, items B6.5.26 (a) and B6.5.28 (b)).
The gains and losses recorded in equity, in line item "Other comprehensive income (loss), will be maintained in this reserve until the expected transaction is concluded, in which case the amounts will be reclassified to operating income (revenues) - aligned with revenues. In the event such transaction (revenue) is not concluded, the accumulated amounts will be fully reclassified to finance income (costs) under CPC 48.
As at June 30, 2020, the annual expected realization of derivatives recorded in equity is as follows:
Company | |||||||||||||||||||
Hedge | Impact | 2020/2021 | 2021/2022 | 2022/2023 | 2023/2024 | 2024/2025 | 2025 to 2028 | Total | |||||||||||
Exchange rate changes on future interest flow s (*) | Finance income (costs) | (3,861) | (3,854) | (2,367) | (1,226) | (733) | (759) | (12,800) | |||||||||||
(3,861) | (3,854) | (2,367) | (1,226) | (733) | (759) | (12,800) | |||||||||||||
Consolidated | |||||||||||||||||||
Hedge | Impact | 2020/2021 | 2021/2022 | 2022/2023 | 2023/2024 | 2024/2025 | 2025 to 2028 | Total | |||||||||||
Exchange rate changes on future interest flow s (*) | Finance costs | (3,861) | (3,854) | (2,367) | (1,226) | (733) | (759) | (12,800) | |||||||||||
Natural HACC | Operating losses | (60,692) | (79,173) | (79,173) | (25,544) | - | - | (244,582) | |||||||||||
(64,553) | (83,027) | (81,540) | (26,770) | (733) | (759) | (257,382) | |||||||||||||
(*) Program discontinued in prior years.
27.8.4 Sensitivity analysis
The table below shows the Company's sensitivity to the presented risk factor, based on changes in the risk factor considered reasonably possible by management (probable scenario).
The probable scenario is obtained based on future dollar, sugar and ethanol (as at June 30, 2020) and the Group's expectations for each one of the variables indicated, over a twelve-month period.
As required by CVM Instruction 475/2008, the sensitivity analysis is also presented to changes in the fair value of financial instruments for another two scenarios, in which market conditions are stressed by 25% and 50%.
47
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
The derivative financial instruments are provided to hedge against risks from future cash flows. The non-derivative financial instruments must not be considered as the Company's net exchange exposure because the table below does not consider the biological asset, as it is not a financial instrument, but it is used in the production of sugar and ethanol for future exports. See Notes 7 and 27.8.
Company | |||||||||||||||||||
Notional amount | Effects on fair value | ||||||||||||||||||
Foreign currency | Risk factor | Probable scenario | 25% stress | 50% stress | |||||||||||||||
Effects on profit or loss | (371.128) | Increase in US$ | (1.148.020) | (1.644.418) | (3.268.915) | ||||||||||||||
Exchange risk | 176.119 | Decrease in price | (302.583) | (256.589) | (531.973) | ||||||||||||||
Sugar hedge accounting | 176.119 | Decrease in price | (302.583) | (256.589) | (531.973) | ||||||||||||||
Effects on equity | (195.009) | (1.450.603) | (1.901.007) | (3.800.888) | |||||||||||||||
Exchange risk | (315.213) | Increase in US$ | (133.688) | (191.523) | (383.045) | ||||||||||||||
Price risk | (112.033) | Increase in price | (178.259) | (152.536) | (305.072) | ||||||||||||||
Sugar hedge accounting | (112.033) | Increase in price | (178.259) | (152.536) | (305.072) | ||||||||||||||
Effects on equity | (427.246) | (311.947) | (344.059) | (688.117) | |||||||||||||||
Consolidated | |||||||||||||||||||
Notional amount | Effects on fair value | ||||||||||||||||||
Foreign currency | Risk factor | Probable scenario | 25% stress | 50% stress | |||||||||||||||
Exchange risk | (913.647) | Increase in US$ | (3.239.547) | (4.641.017) | (9.261.614) | ||||||||||||||
Price risk | 44.219 | Decrease in price | (523.050) | (446.431) | (903.415) | ||||||||||||||
Sugar hedge accounting | 44.219 | Decrease in price | (523.050) | (446.431) | (903.415) | ||||||||||||||
Effects on equity | (869.428) | (3.762.597) | (5.087.448) | (10.165.029) | |||||||||||||||
Exchange risk | (315.213) | Increase in US$ | (133.688) | (191.523) | (383.045) | ||||||||||||||
Price risk | (112.033) | Increase in price | (178.259) | (152.536) | (305.072) | ||||||||||||||
Sugar hedge accounting | (112.033) | Increase in price | (178.259) | (152.536) | (305.072) | ||||||||||||||
Interest rate risk | 135.935 | Decrease in Libor rate | (343) | (685) | (1.370) | ||||||||||||||
Effects on equity | (291.310) | (312.290) | (344.744) | (689.487) | |||||||||||||||
As at June 30, 2020, the probable scenario considers the CDI rate projected for 12 months - disclosed at B3's website (DI swap reference rates x PRÉ) and the Libor rate for 12 months disclosed by Bloomberg. These rates were applied in the Company's exposure volume - composed of: borrowings and financing, advances from customers, cash and cash equivalents and short-term investments.
Based on the exposure in the probable scenario, a stress of 25% and 50% was applied taking into account the worst case scenarios in order to determine the impact on the Company's finance income (costs).
The consolidated sensitivity results are broken down below:
Company | ||||||||
Notional | Probable | |||||||
amount | scenario | 25% stress | 50% stress | |||||
Operations indexed to CDI | (240,649) | (10,699) | (24,072) | (26,747) | ||||
Operations indexed to Lib | or | (698,693) | (13,360) | (30,060) | (33,400) | |||
Total | (939,342) | (24,059) | (54,132) | (60,147) | ||||
Consolidated | ||||||||
Notional | Probable | |||||||
amount | scenario | 25% stress | 50% stress | |||||
Operations indexed to CDI | (360,303) | (27,081) | (60,932) | (67,703) | ||||
Operations indexed to Lib | or | (2,266,615) | (43,173) | (97,139) | (107,932) | |||
Total | (2,626,918) | (70,254) | (158,071) | (175,635) | ||||
48
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
28. COMMITMENTS a) Selling
The Group has several arrangements in the sugar and ethanol market under which it commits to sell volumes of these products in future crops. As at June 30, 2020, the volumes of these commitments total 1,750,036 tons of sugar (1,693,385 tons of sugar as at March 31, 2020), 480,268 cubic meters of ethanol (211,440 cubic meters as at March 31, 2020), and electricity supply commitments, assumed in power auctions and free market, which total 7,125 GWh to be supplied by 2035 (7,595 GWh as at March 31, 2020).
(b) Purchases
The Group has several commitments for the purchase of sugarcane from third parties to ensure part of its production in future crops. The volume of sugarcane to be purchased is estimated based on the expected productivity of the areas where the sugarcane plantations are located. The amount to be paid by the Group is determined at the end of each harvest campaign according to the price published by CONSECANA, plus or less other applicable contractual terms.
As at June 30, 2020, estimated purchase commitments by crop are as follows:
Consolidated | ||||||||||||||
Area | Estimated quantity of | Estimated | ||||||||||||
Harvest | (hectares) | cane (ton) | amount | |||||||||||
2020/2021 | 140,181 | 10,337,768 | 861,697 | |||||||||||
2021/2022 | 88,059 | 6,458,077 | 538,308 | |||||||||||
2022/2023 | 63,855 | 4,682,435 | 390,301 | |||||||||||
2023/2024 | 47,907 | 3,396,903 | 283,146 | |||||||||||
After 2024 | 46,300 | 3,112,495 | 259,440 | |||||||||||
386,302 | 27,987,678 | 2,332,893 | ||||||||||||
The Group has commitments for the purchase of energy in the amount of 779 GWh (1,048 GWh as at March 31, 2020). The price of these agreements is bilaterally negotiated by the agents selling electric energy in the Free Trade Market (ACL).
c) Terminal de Exportação de Açúcar do Guarujá Limitada - TEAG
TEAG is a party to an agreement for the lease of a port terminal with Companhia Docas do Estado de São Paulo ("CODESP"), which provides for the payment by TEAG, as lease, of a fixed monthly installment of R$3,1137/m² calculated on a minimum area of 74,206.410 m² equivalent to R$231.06 per month or R$2,773 per year, plus a guaranteed variable minimum installment equivalent to R$5,328 per year payable to CODESP, corresponding to R$2.8400/ton calculated on a minimum handling of one million and five hundred thousand tons of cargo. TEAG operates under the concession agreement entered into with Companhia Docas do Estado de São Paulo (CODESP), falling due on July 6, 2038.
d) Lawsuits against Instituto do Açúcar e do Álcool - IAA
The Company is a plaintiff in lawsuits seeking a compensation from the Federal Government for losses arising from pricing differences incurred in the period in which sugar and ethanol prices were frozen. In some cases, upon effective receipt of the indemnities, a portion of the amount received will be transferred on behalf of third parties in connection with the contractual obligations.
e) Bank guarantees and collateral insurance
As at June 30, 2020, the balances of (i) bank guarantee is R$142,789 in Consolidated (R$142,240 in Consolidated as at March 31, 2020); and (ii) collateral insurance relating to lawsuits of R$250,624, in Company, and R$603,454 in Consolidated (R$277,600 and R$588,780 as at March 31, 2020, respectively).
49
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
29. EMPLOYEES' BENEFIT
The consolidated amount invested by the Company in the pension plan was R$364 in the period ended June 30, 2020 (R$347 as at June 30, 2019), recognized in line item "General, administrative and selling expenses". Due to the features and design of the pension plan, the Company does not incur any future postemployment or actuarial obligations.
As at June 30, 2020, the Company booked a liability related to the deferred variable compensation that will be paid to some eligible employees, according to the policy, in the amount of R$22,474 (R$26,021 as at March 31, 2020). Additionally, the Company has recorded a liability related to PPR (Profit Sharing Program), as set forth in the Collective Labor Agreement, in the amount of R$9,718 (R$31,550 as at March 31, 2020).
30. SEGMENT INFORMATION
Information by product margin, and geographic areas, used by the key decision makers is as follows:
Consolidated | ||||||||||||||||||
Three-month period ended 06.30.20 | ||||||||||||||||||
Consolidated profit (loss) by product | Sugar | Ethanol | Energy | Other | Total | |||||||||||||
Net revenue | 702,109 | 441,787 | 116,882 | 1,408,848 | 2,669,626 | |||||||||||||
Cost of sales and services | (449,570) | (313,620) | (71,274) | (1,423,990) | (2,258,454) | |||||||||||||
Gross profit | 252,539 | 128,167 | 45,608 | (15,142) | 411,172 | |||||||||||||
Gross margin | 36% | 29% | 39% | -1% | 15% | |||||||||||||
Selling expenses | (60,692) | (17,379) | (2,619) | (260) | (80,950) | |||||||||||||
Operating margin | 191,847 | 110,788 | 42,989 | (15,402) | 330,222 | |||||||||||||
Consolidated | ||||||||||||||||||
Three-month period ended 06.30.20 | ||||||||||||||||||
Sales by geographic area | Sugar | Ethanol | Energy | Other | Total | |||||||||||||
Asia | 524,266 | 157,772 | - | 1,269,103 | 1,951,141 | |||||||||||||
North America | 21,592 | 48,943 | - | - | 70,535 | |||||||||||||
South America | - | 26,171 | - | - | 26,171 | |||||||||||||
Africa | 100,202 | - | - | 4,797 | 104,999 | |||||||||||||
Europe | 2,178 | - | - | 123,268 | 125,446 | |||||||||||||
Foreign market | 648,238 | 232,886 | - | 1,397,168 | 2,278,292 | |||||||||||||
Domestic market | 53,871 | 208,901 | 116,882 | 11,680 | 391,334 | |||||||||||||
TOTAL | 702,109 | 441,787 | 116,882 | 1,408,848 | 2,669,626 | |||||||||||||
Consolidated | ||||||||||||||||||
Three-month period ended 06.30.19 | ||||||||||||||||||
Consolidated profit (loss) by product | Sugar | Ethanol | Energy | Other | Total | |||||||||||||
Net revenue | 285,757 | 696,154 | 108,007 | 628,446 | 1,718,364 | |||||||||||||
Cost of sales and services | (234,892) | (541,976) | (74,523) | (636,237) | (1,487,628) | |||||||||||||
Gross profit | 50,865 | 154,178 | 33,484 | (7,791) | 230,736 | |||||||||||||
Gross margin | 18% | 22% | 31% | -1% | 13% | |||||||||||||
Selling expenses | (25,568) | (7,338) | (2,343) | - | (35,249) | |||||||||||||
Operating margin | 25,297 | 146,840 | 31,141 | (7,791) | 195,487 | |||||||||||||
50
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Consolidated | |||||||||||||
Three-month period ended 06.30.19 | |||||||||||||
Sales by geographic area | Sugar | Ethanol | Energy | Other | Total | ||||||||
Asia | 135.403 | - | - | 512.390 | 647.793 | ||||||||
North America | 114.983 | 86.229 | - | - | 201.212 | ||||||||
Africa | 2.420 | - | - | - | 2.420 | ||||||||
Europe | - | - | - | 111.150 | 111.150 | ||||||||
Foreign market | 252.806 | 86.229 | - | 623.540 | 962.575 | ||||||||
Domestic market | 32.951 | 609.925 | 108.007 | 4.906 | 755.789 | ||||||||
TOTAL | 285.757 | 696.154 | 108.007 | 628.446 | 1.718.364 | ||||||||
The Company's key decision makers use the operating margin as a tool to measure the recurring operating cash generation capacity and it also allows comparisons with other companies.
Consolidated
Three-month period ended
06.30.2006.30.19
Operating margin | 330,222 | 195,487 | ||
Other operating expenses | (104,671) | (182,588) | ||
Finance costs | (485,761) | (51,001) | ||
Income tax and social contribution | (21,081) | (130,792) | ||
Loss for the period | (281,291) | (168,894) | ||
Information on key customers
In the period ended June 30, 2020, the Group has one customer, its related party Louis Dreyfus Company Suisse S.A., under common control, which accounts for 58% of the Group's consolidated revenue.
31. APPROVAL OF INTERIM FINANCIAL STATEMENTS
The interim financial statements were approved by the Company's Management and authorized for issue on September 17, 2020.
51
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
NON-STATUTORY AUDIT COMMITTEE OPINION
The non-statutory Audit Committee of Biosev S.A. ("Company"), jointly with representatives of the Company and of BDO RCS Auditores Independentes, independent auditors of the Company, examined the interim financial statements of the Company related to the period ended on June 30 th, 2020. Based in the analysis performed and considering the draft of the audit report, without remarks, prepared by BDO RCS Auditores Independentes, the non-statutory Audit Committee of the Company recommended to the Board of Directors of the Company, unanimously and without remarks, the approval of the referred interim financial statements.
São Paulo, September 16 th, 2020
FEDERICO ADRIAN CERISOLI | PATRICK JULIEN TREUER |
ADRIAN LIMA DA HORA
52
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2020
(Amounts in thousands of Brazilian reais, unless otherwise stated)
OPINIONS AND STATEMENTS
As Executive Officers of Biosev SA, we declare under, Article 25, Paragraph 1 st, Item V and VI, CVM Instruction 480 of December 7, 2009, as amended, that we reviewed, discussed and agreed with the interim financial statements and the terms of the external auditors report on the interim financial statements related to the period ended on June 30 th, 2020.
São Paulo, September 17 th, 2020
Juan Jose Blanchard
Chief Executive Officer
Leonardo Oliveira D'Elia
Chief Financial and Investor Relations Officer
Ricardo Lopes da Silva
Chief Operating Officer
53
HISTORICAL OPERATIONAL RECORDS
São Paulo, September 17, 2020 - Biosev, one of the world's largest sugarcane processors, announces
its results for the first quarter of the 2020/21 crop.
1Q21 HIGHLIGHTS
- Historical operational records for the period:
- Crushing volume totaled 11.6 million tons in the 1Q21, 6.9% higher than in 1Q20;
- Product TRS totaled 129.0 kg TRS/ton, an increase of 10.6% compared to 1Q20;
- Total Product TRS was 1,498 thousand tons, an increase of 18.3% compared to 1Q20, mainly due to the 739 thousand tons of sugar produced, also a record for the period;
- Consolidated agricultural yield (TCH) increased by 2.9% to 94.5 ton/ha in the quarter;
- Sugar mix was 51.6% in the 1Q21, due to its higher profitability in relation to ethanol, an increase of 17.9 p.p. compared to 1Q20. Anhydrous mix was 33.3%, in line with the same period of the previous crop;
- Industrial efficiency increased by 3.1% to 1.042 in the quarter.
- Net Revenue ex-HACC/other produts of R$ 1.3 billion, 13.8% higher than in 1Q20;
- Net Operating Result was an income of R$ 186.5 million in the 1Q21, compared to the net operating result that was an expense of R$ 13.2 million in 1Q20.
- Adjusted EBITDA ex-resale/HACC totaled R$369.1 million, an increase of 8.9%; EBITDA per unit was R$31.7 per ton, an increase of 1.8% and EBITDA Margin was 33.9%, stable compared to 1Q20;
B3: BSEV3
Stock price on 9/16/2020: R$5.00 | Number of shares: 1,020,429,426 | Market cap: R$5.1 billion
Conference Call in Portuguese with translation into English: September 18, 2020
12:00 p.m. (Brasília - BRT) | 10:00 a.m. (NY - EST) | 3:00 p.m. (London - GMT) Portuguese: (11) 3181-8565 | English: +1 (412) 717-9627
Code: Biosev
Investor Relations
E-mail:ri@biosev.com
Telephone: (11) 3092-5291
http://ri.biosev.com
1
1. OPERATING PERFORMANCE
The following table presents key indicators for operating efficiency, productivity and production volumes, which are analyzed in this section:
Efficiency and Productivity | 1Q21 | 1Q20 | % | ||
Crushing (thousand tons) | 11,633 | 10,883 | 6.9% | ||
TCH (ton/ha) | 94.5 | 91.8 | 2.9% | ||
Product TRS (Kg TRS/ton) | 129.0 | 116.6 | 10.6% | ||
Industrial efficiency | 1.042 | 1.011 | 3.1% | ||
Production | 1Q21 | 1Q20 | % | ||
Sugar mix (%) | 51.6% | 33.7% | 17.9 p.p. | ||
Ethanol mix (%) | 48.4% | 66.3% | -17.9 p.p. | ||
Anhydrous mix (%) | 33.3% | 33.7% | -0.4 p.p. | ||
Production (thousand tons of Product TRS) ¹ | 1,498 | 1,266 | 18.3% | ||
Sugar (thousand tons) | 739 | 408 | 81.4% | ||
Ethanol (thousand m³) | 426 | 494 | -13.8% | ||
Cogeneration (GWh) | 344.5 | 311.1 | 10.7% | ||
- Considers the ratios of conversion of sugar and ethanol in the State of São Paulo, as disclosed in the Consecana Manual.
In order to improve the management of both industrial and agricultural assets, as from the 2020/21 crop, the Company changed the composition of its clusters. The Ribeirão Preto Norte cluster is now composed by the Continental and Lagoa da Prata plants and the Ribeirão Preto Sul cluster is now composed by the Santa Elisa, Leme, Vale do Rosário and MB (Morro Agudo) plants.
2
1.1. Crushing
The following table shows crushing volume on a consolidated basis and by cluster:
Efficiency | 1Q21 | 1Q20 | % |
Crushing ('000 tons) | 11,633 | 10,883 | 6.9% |
Own | 6,935 | 6,558 | 5.7% |
Third Parties | 4,698 | 4,325 | 8.6% |
Ribeirão Preto Norte Cluster | 2,175 | 1,838 | 18.3% |
Ribeirão Preto Sul Cluster | 6,798 | 6,222 | 9.3% |
Mato Grosso do Sul Cluster | 2,660 | 2,823 | -5.8% |
The Company reached total crushing volume of 11.6 million tons in 1Q21, historical record for the period, which represented an increase of 6.9% compared to 1Q20, mainly reflecting the higher yield measured by TCH (+2.9%), favorable (drier) weather conditions during the harvest period (April to June), and improved operational performance, partially offset by the frost mitigation strategy at the Mato Grosso do Sul Cluster.
At the Ribeirão Preto Norte Cluster, crushing volume was 2.2 million tons, 18.3% higher than in 1Q20, mainly supported by the 5.4% increase in TCH and improved operational performance.
At the Ribeirão Preto Sul Cluster, crushing volume was 6.8 million tons, 9.3% higher than in 1Q20, mainly supported by the 6.2% increase in TCH and improved operational performance.
At the Mato Grosso do Sul Cluster, crushing volume was 2.7 million tons, 5.8% lower than in 1Q20, reflecting the Company's strategy to mitigate the effects from the frost that affected the region in the previous crop and in the first quarter of the current crop (accelerating harvest and crushing operations as from the second quarter of the previous crop to mitigate impacts on sucrose quality and accumulation), which consequently reduced the cluster's TCH by 5.5% in 1Q21.
1.2. Tons of Cane per Hectare (TCH)
The following table shows the evolution in TCH on a consolidated basis and by cluster:
Productivity | 1Q21 | 1Q20 | % |
TCH - Agricultural yield (ton/ha) | 94.5 | 91.8 | 2.9% |
Ribeirão Preto Norte Cluster | 97.1 | 92.2 | 5.4% |
Ribeirão Preto Sul Cluster | 99.4 | 93.6 | 6.2% |
Mato Grosso do Sul Cluster | 83.3 | 88.2 | -5.5% |
Cane yield measured by consolidated TCH reached 94.5 ton/ha in the first quarter of the 2020/21 crop, 2.9% higher than in the first period of the previous crop, which is basically explained by the application of best agronomic practices in crop regeneration to the sugar plantations, such as vinasse handling, organic fertilization, foliar treatments, among others, in addition to the favorable weather conditions during the field development period (January to March), partially offset by the frost that affected the region of the Mato Grosso do Sul Cluster in the second quarter of the previous crop and the first quarter of the current crop.
3
1.3. Product Total Recoverable Sugar (TRS)
The following table shows the evolution of Product TRS and by cluster:
Productivity | 1Q21 | 1Q20 | % |
Product TRS (Kg TRS/ton) | 129.0 | 116.6 | 10.6% |
Ribeirão Preto Norte Cluster | 131.6 | 121.2 | 8.6% |
Ribeirão Preto Sul Cluster | 128.9 | 117.3 | 9.9% |
Mato Grosso do Sul Cluster | 127.1 | 112.0 | 13.5% |
Product TRS content was 129.0 kg TRS/ton in the 1Q21, historical record for the period, an increase of 10.6% compared to 1Q20, which reflects the continuous impacts of the evolution of the phytosanitary quality of the sugarcane crop, the quality of the harvesting processes, the intensive use of ripening agents, an improved operational performance and favorable (drier) weather conditions during the harvest, which favors concentration of sugar content.
Industrial efficiency reached 1.042 in the quarter, an increase of 3.1% compared to 1Q20. The results demonstrate the higher efficiency in converting cane into the final products of sugar and ethanol, as well as the lower losses in production processes. Industrial efficiency is calculated based on the volume of TRS produced by the mills.
Total production in tons of Product TRS was 1,498 thousand tons, historical record for the period, an increase of 18.3% compared to 1Q20, mainly due to the evolution of the sugarcane crop and industrial efficiency gains (+3.1%).
Sugar mix was 51.6%, due to the higher allocation of TRS to sugar production, given the product's higher profitability in the period compared to ethanol, an increase of 17.9 p.p. compared to the same period of the previous crop, which was more focused on ethanol (mix of 66.3% in 1Q20).
Anhydrous mix (anhydrous ethanol as a share of total ethanol production) was 33.3% in 1Q21, in line with 1Q20, reflecting the commercial strategy to focus on higher-value products, including ethanol by- products.
1.4. Cogeneration
The following table presents productivity and cogeneration volume for sale:
Production | 1Q21 | 1Q20 | % |
Total Cogen (GWh) | 344.5 | 311.1 | 10.7% |
Cogen for Sale (GWh) | 344.5 | 311.1 | 10.7% |
Ribeirão Preto Norte Cluster | 45.9 | 33.3 | 37.9% |
Ribeirão Preto Sul Cluster | 165.8 | 145.1 | 14.2% |
Mato Grosso do Sul Cluster | 132.8 | 132.7 | 0.0% |
Cogen for Sale/Crushing (kWh/ton) | 32.5 | 31.0 | 4.9% |
Ribeirão Preto Norte Cluster | 40.7 | 33.9 | 20.0% |
Ribeirão Preto Sul Cluster | 24.4 | 23.3 | 4.6% |
Mato Grosso do Sul Cluster | 49.9 | 47.0 | 6.2% |
The Company has cogeneration power plants at all its eight industrial sites and is energy self-sufficient during the harvesting period. Out of these units, seven produce surplus electricity for sale.
Total cogeneration for sale in 1Q21 increased by 10.7% compared to 1Q20, and reached a volume of
4
344.5 GWh, mainly due to the higher crushing volume compared to the previous period (+6.9%).
The cogeneration volume of the MS Cluster, despite lower crushing volume (-5.8%) compared to 1Q20, remained in line with the previous crop, which reiterates the superior industrial efficiency of the cluster in the period (+4.9%), in line with 1Q20. The cogeneration volume of the other clusters increased by 18.7% on average, compared to 1Q20.
The productivity of cogeneration units measured in kWh of power sold per ton of cane crushed stood at
32.5 kWh/ton in 1Q21, an increase of 4.9% compared to 1Q20. These results reflect the higher total crushing volume and the Company's strategy to optimize sales by prioritizing products and periods that generate higher added value.
5
2. ECONOMIC AND FINANCIAL PERFORMANCE
2.1. Net Revenue
Net revenue excluding the non-cash effects from the hedge accounting of foreign currency-denominated debt (HACC) amounted to R$2.7 billion, the Company's record quarterly revenue, an increase of 53.4% compared to 1Q20. The result is primarily explained by the growth in sugar export volumes, the higher crushing volume, the higher industrial efficiency in sugarcane conversion, the higher average ethanol export prices, and the revenues from export performance contracts associated with the rollover of foreign currency-denominated debt obligations, with these factors partially offset by the decrease in ethanol import volumes, the average sugar export prices, and by the fact that previous crop included revenue from the Nordeste Cluster. Note that, excluding the revenue from the Nordeste Cluster in the previous crop to improve the comparison with the current crop, net revenue would be 53.9% higher than in 1Q20.
Excluding the effects from resale operations (of finished products, such as (i) sugar, ethanol and energy; and (ii) other commodities, which are required to comply with export performance contracts associated with obligations denominated in foreign currency), the Company's net revenue was R$1.1 billion, an increase of 9.7% compared to 1Q20, mainly due to the growth in sugar and ethanol export volumes and the higher average ethanol export prices, partially offset by the decrease in ethanol import volumes and respective average price and by the fact that previous crop included revenue from the Nordeste Cluster. Note that, excluding the revenue from the Nordeste Cluster in the previous crop to improve the comparison with the current crop, net revenue would be 10.3% higher than in the 1Q20.
The following table presents a breakdown of net revenue ex-HACC:
Net revenue ex-HACC (R$ thousand) | 1Q21 | 1Q20 | % | |||||
Sugar | 715,593 | 311,464 | 129.8% | |||||
Domestic market | 53,871 | 32,951 | 63.5% | |||||
Export market | 661,722 | 278,513 | 137.6% | |||||
Ethanol | 446,785 | 704,315 | -36.6% | |||||
Domestic | 208,901 | 609,925 | -65.7% | |||||
Export market | 237,884 | 94,390 | 152.0% | |||||
Energy | 116,882 | 108,007 | 8.2% | |||||
Total | 1,279,259 | 1,123,786 | 13.8% | |||||
Other Products | 1,408,848 | 628,446 | 124.2% | |||||
Bagasse, services and others | 11,680 | 4,906 | 138.0% | |||||
Export performance contracts | 1,397,168 | 623,539 | 124.1% | |||||
Total | 2,688,107 | 1,752,231 | 53.4% | |||||
- 1Q20 includes amounts from the Nordeste Cluster.
Revenue from resale operations is detailed in the following table:
Resale operations (R$ thousand) | 1Q21 | 1Q20 | % | |||||||
Sugar, ethanol and energy ¹ | 202,214 | 136,579 | 48.1% | |||||||
Export performance contracts | 1,397,168 | 623,539 | 124.1% | |||||||
Total | 1,599,382 | 760,118 | 110.4% | |||||||
- Revenue from resales of sugar, ethanol and energy is accounted for in the lines corresponding to the respective products in the table of Net Revenue ex-HACC.
6
The following charts present a breakdown of net revenue ex-HACC, excluding the effects from hedge accounting and revenue from export performance contracts, by product and by market in the respective periods:
Net revenue ex-HACC/export performance
by product (%)
Net revenue ex-HACC/export performance
by market (%)
The following table presents the sugar and ethanol inventory balance variation when compared to the beginning of each crop, showing a higher carry out when compared to the same period of the previous crop due to the Company's strategy to optimize sales by prioritizing periods that capture higher value added:
Inventories - Variation | 1Q21 | 1Q20 | % | |||||
Sugar ('000 tons) | 278 | 196 | 42% | |||||
Ethanol ('000 m3) | 232 | 149 | 55% | |||||
7
2.1.1. Sugar
Net revenue from sugar sales excluding the non-cash effects from the hedge accounting of foreign currency-denominated debt (HACC) amounted to R$715.6 million, an increase of 129.8% compared to the 1Q20, mainly due to the higher export volumes, partially offset by the lower average prices. This variation reflects (i) the production mix, which prioritized sugar, given the product's higher profitability in the period compared to ethanol; (ii) higher crushing volume; (iii) improved operational performance, which translates into higher efficiency in sugarcane conversion; and (iv) average prices of the product in the international market, compared to the previous crop.
The following chart presents a comparison of sugar volumes and average prices, excluding the non-cash effects from the hedge accounting of foreign currency-denominated debt (HACC):
Volume (thousand tons) and Average Price (R$/ton)
The following charts present a breakdown by type of sugar, excluding the non-cash effects from the hedge accounting of foreign currency-denominated debt (HACC):
Net Revenue ex-HACC
by Sugar Type (%)
8
2.1.2. Ethanol
Net revenue from ethanol sales excluding the non-cash effects from the hedge accounting of foreign currency-denominated debt (HACC) amounted to R$446.8 million, a decrease of 36.6% compared to the 1Q20, when the sales volume in the period decreased 38.5% due to a shift in the sugar mix and higher carry out in the period.
The price increased 3.2% when compared to 1Q20, although the average market price decreased 12%, especially due to the increase in ethanol exports due to the Company's strategy to optimize sales by prioritizing products and periods that capture higher value added, reflecting the ethanol competitiveness in the foreign market, improved by the depreciation in the Brazilian real against the U.S. dollar. Note that, excluding the revenue from the Nordeste Cluster in the previous crop to improve the comparison with the current crop, net revenue would be 36.1% lower than in the 1Q20.
The following chart presents a comparison of ethanol sales volumes and average prices, excluding the non-cash effects from the hedge accounting of foreign currency-denominated debt (HACC):
Volume (thousand m³) and Average Price (R$/m³)
The following chart presents a breakdown of revenue by type of ethanol, excluding the non-cash effects from the hedge accounting of foreign currency-denominated debt (HACC):
Net Revenue ex-HACC
by Ethanol Type (%)
9
2.1.3. Energy
Net revenue from energy was R$116.9 million, an increase of 8.2% compared to the 1Q20. This variation is mainly due to the higher sales volume impacted by the higher crushing volume and partially offset by lower average sales prices in the period of 3%, which were less than the decrease in the average market price of 43%.
The following chart presents a comparison of energy own sales volume and average own sales price.
Sales Volume (GWh) and Average Sales Price (R$/MWh) - Own
2.1.4. Other products
The line item "Other products" records revenue from sales of raw bagasse, services and other items, in addition to revenue from the sale of commodities in the spot market to fulfill export contracts with the aim of settling debt obligations in foreign currency.
Revenue from the sale of other products totaled R$1.4 billion, an increase of 124.2% compared to the 1Q20, mainly due to the growth in the above-referred export performance contracts.
10
2.2. Cost of Goods Sold (COGS)
The Company has continued to consistently deliver cost reductions, while consolidating initiatives to adjust structures and become more resilient in an environment of still highly challenging pricing.
In nominal terms, cash COGS ex-resale totaled R$552.7 million, an increase of 6.2% compared to 1Q20, due to higher sales volumes, increase of 10.4% in the CONSECANA price index in the period, and advanced recognition of raw material costs in view of the higher crushing volume (to be compensated later in the crop), partially offset by the reductions in operating costs under the ongoing process to streamline costs and structures.
COGS per unit was R$672 per ton, an increase of 4.5% compared to 1Q20, mainly impacted by the increase of 10.4% in the CONSECANA price index in the period, and advanced recognition of raw material costs in view of the higher crushing volume (to be compensated later in the crop).
The following tables present a breakdown of total COGS and cash COGS:
COGS and cash COGS (R$ thousand) ³ | 1Q21 | 1Q20 | % | |||||
Total COGS | (2,297,420) | (1,513,659) | 51.8% | |||||
Non-cash items | (115,711) | (219,571) | -47.3% | |||||
Depreciation and amortization | (329,540) | (312,968) | 5.3% | |||||
Gains (losses) in biological assets ¹ | 213,829 | 93,397 | 128.9% | |||||
Cash COGS | (2,181,709) | (1,294,088) | 68.6% | |||||
Personnel | (117,709) | (114,618) | 2.7% | |||||
Raw materials ² | (388,420) | (373,024) | 4.1% | |||||
Inputs | (46,567) | (33,030) | 41.0% | |||||
Resale of goods | (1,629,013) | (773,416) | 110.6% | |||||
Sugar, ethanol and energy | (223,888) | (145,068) | 54.3% | |||||
Export performance contracts | (1,405,125) | (628,348) | 123.6% | |||||
Cash COGS ex-resale | (552,696) | (520,672) | 6.2% | |||||
- Gains (losses) from the fair value adjustment less estimated cost of sales of biological assets. ² Sugarcane, lease and HLT. ³ Excluding the effect from IFRS16.
Cash COGS ex-resale (R$ thousand) ¹ | 1Q21 | 1Q20 | % | |||||
Agricultural costs | (462,563) | (447,808) | 3.3% | |||||
HLT (own + third-party cane) | (142,020) | (163,949) | -13.4% | |||||
Land lease | (114,450) | (110,822) | 3.3% | |||||
Purchases of third-party cane | (206,093) | (173,036) | 19.1% | |||||
Industrial costs | (76,103) | (56,454) | 34.8% | |||||
Others | (14,030) | (16,411) | -14.5% | |||||
Cash COGS ex-resale | (552,696) | (520,672) | 6.2% | |||||
Product TRS sold ex-resale (thousand tons) | 823 | 810 | 1.6% | |||||
Cash COGS ex-resale (R$/ton) | (672) | (643) | 4.5% | |||||
¹ Excluding the effect from IFRS16.
11
2.3. Selling, General and Administrative (SG&A) Expenses
SG&A expenses totaled R$149.7 million, an increase of 43.9% compared to 1Q20.
Selling expenses totaled R$80.9 million, an increase of 129.7% compared to 1Q20, due to the difference in the composition of the sales mix in the period, focused on the sugar mix and the increase in exports, which increased the demurrage and port storage expenses.
General and administrative expenses totaled R$68.7 million, in line with with 1Q20, mainly due to the effects from the ongoing process to streamline operating and organizational structures, fully offset against the increase in consulting expenses in the period.
Depreciation expenses recognized under SG&A expenses totaled R$5.0 million in 1Q21, compared to R$5.3 million in 1Q20.
The following table presents a comparison of cash SG&A expenses between periods:
Cash SG&A (R$ thousand) ¹ | 1Q21 | 1Q20 | % | |||||
Selling | (80,950) | (35,249) | 129.7% | |||||
Freight | (54,808) | (26,911) | 103.7% | |||||
Shipping charges | (22,919) | (5,392) | 325.1% | |||||
Commissions, wharfage and other | (3,223) | (2,946) | 9.4% | |||||
General and administrative | (68,753) | (68,765) | 0.0% | |||||
Personnel | (32,068) | (42,999) | -25.4% | |||||
Services | (31,496) | (19,523) | 61.3% | |||||
Other | (5,189) | (6,243) | -16.9% | |||||
Cash SG&A | (149,703) | (104,014) | 43.9% | |||||
¹ Excluding the effect from IFRS16.
12
2.4. EBITDA
The following table presents a breakdown of Adjusted EBITDA ex-resale/HACC:
EBITDA composition (R$ thousand) ⁴ | 1Q21 | 1Q20 | % |
Net revenue | 2,669,626 | 1,718,364 | 55.4% |
Cash COGS | (2,181,709) | (1,294,088) | 68.6% |
Gross profit (cash) | 487,917 | 424,276 | 15.0% |
Cash SG&A | (149,703) | (104,014) | 43.9% |
TEAG - profit or loss ¹ | (835) | (1,375) | -39.3% |
Other operating income (expenses) | (28,018) | (105,125) | -73.3% |
Non-recurring items | 11,665 | 78,168 | -85.1% |
Adjusted EBITDA | 321,026 | 291,930 | 10.0% |
Adjusted EBITDA margin | 12.0% | 17.0% | -5.0 p.p. |
Resale effect ² | 29,631 | 13,298 | 122.8% |
HACC effect ³ | 18,481 | 33,868 | -45.4% |
EBITDA ex-resale/HACC | 369,138 | 339,095 | 8.9% |
EBITDA margin ex-resale/HACC | 33.9% | 34.2% | -0.3 p.p. |
Crushing (thousand tons) | 11,633 | 10,883 | 6.9% |
Adjusted EBITDA per unit (R$/ton) | 27.6 | 26.8 | 2.9% |
EBITDA per unit ex-resale/HACC (R$/ton) | 31.7 | 31.2 | 1.8% |
- Equivalent to the share of 50% held in the Guarujá Sugar Terminal (TEAG). ² Reverses the impacts of resale of sugar, ethanol, energy and export performance operations. ³ Reverses the non-cash effects from the hedge accounting of foreign currency-denominated debt. ⁴ Excluding the effect from IFRS16.
Adjusted EBITDA ex-resale/HACC (which excludes from the net revenue calculation the effects from resale operations, the non-cash hedge accounting of foreign currency-denominated debt, and IFRS 16) totaled R$369.1 million, with EBITDA margin of 33.9% and EBITDA per unit of R$31.7 per ton, mainly due to the increase in net revenue by virtue of the operational improvements, partially offset by the increase in COGS and SG&A expenses, reflecting the impact of 10.4% in the CONSECANA price index in the period and the changes in the sales mix composition.
The following table presents a reconciliation of Adjusted EBITDA with the Income Statement in the periods:
EBITDA reconciliation (R$ thousand) | 1Q21 | 1Q20 | % |
Profit or loss for the year/period | (281,291) | (168,894) | 66.5% |
Income tax and social contribution | 21,081 | 130,792 | -83.9% |
Financial expenses, net | 485,762 | 51,001 | 852.5% |
Depreciation, amortization and depletion | 453,749 | 436,155 | 4.0% |
EBITDA CVM 527 | 679,301 | 449,054 | 51.3% |
Losses (gains) in biological assets ¹ | (213,829) | (93,397) | 128.9% |
Concession amortization - TEAG | 2,100 | 2,100 | 0.0% |
Non-recurring items | 11,665 | 78,168 | -85.1% |
IFRS16 impacts | (158,211) | (143,995) | 9.9% |
Adjusted EBITDA | 321,026 | 291,930 | 10.0% |
Adjusted EBITDA Margin | 12.0% | 17.0% | -5.0 p.p. |
¹ Losses (gains) from the fair value adjustment less estimated cost of sales of biological assets.
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2.5. Hedge
The following table shows the aggregate position of our hedged sugar volumes and prices (via commodity and foreign exchange derivative contracts) as at June 30, 2020:
Hedge on 06/30/2020 | 20/21 Crop | 21/22 Crop | ||||
Sugar (#NY11) | ||||||
Volume ('000 tons) | 1,036 | 470 | ||||
Average Price (cUS$/lb) | 13.13 | 13.81 | ||||
FX (US$) | ||||||
Amount (US$ million) | 306 | 115 | ||||
Average Price (R$/US$) | 4.455 | 4.278 | ||||
Hedged Price (cR$/lb) w/o Pol.
Hedged Price (cR$/lb) w/ Pol.
Exposure Hedged (%) - Net Consecana
58.49 59.09
60.95 61.57
88.0% 54.0%
14
2.6. Financial Results
Excluding the effects from exchange variation, the net financial result was an expense of R$62.6 million, compared to an expense of R$93.3 million in 1Q20. The variation is mainly explained by the higher gains from the settlement and mark-to-market adjustment of derivatives positions, partially offset by the lower interest income from short-term investments in the period.
Including exchange variation, the net financial result was an expense of R$446.0 million in 1Q21. Exchange variation had a negative impact mainly due to the 5.3% depreciation of the Brazilian real against the U.S. dollar; in 1Q20, the net financial result was an expense of R$17.0 million, positively impacted by exchange rate changes (a 1.7% appreciation of the Brazilian real against the U.S. dollar), as shown in the following table:
PTAX in the period | 1Q21 | 1Q20 | % |
Initial - as at March 31 | 5.1987 | 3.8967 | 33.4% |
Final - as at June 30 | 5.4760 | 3.8322 | 42.9% |
Variation | 5.3% | -1.7% | 7.0 p.p. |
The following table shows the changes in the financial income (expenses) between the periods:
Financial income (expenses) (R$ | 1Q21 | 1Q20 | % | |||||
thousand) ¹ | ||||||||
Net financial expenses | (446,007) | (16,994) | 2524.5% | |||||
Exchange rate changes (FX) | (383,429) | 76,284 | -602.6% | |||||
Financial expenses before FX | (62,578) | (93,278) | -32.9% | |||||
Interest expenses | (117,181) | (111,918) | 4.7% | |||||
Income from short-term investments | 1,786 | 5,553 | -67.8% | |||||
Derivative transactions | 49,376 | 9,279 | 432.1% | |||||
Other income (expenses) | 3,441 | 3,808 | -9.6% | |||||
- Excluding the effect from IFRS16.
15
2.7. Profit or Loss for the Period
Net loss for the period totaled R$280.8 million, compared to a loss of R$163.7 million in 1Q20. In view of the aforementioned factors, net loss for the period was mainly caused by exchange variation, which was partially offset by higher net revenues and higher gains from the settlement and mark-to-market adjustment of derivatives.
16
3. INVESTMENTS
The Company invested R$242.8 million in the period, a decrease of 5.8% compared to 1Q20. This variation reflects the strategy to cut costs and increase competitiveness, based on the pillars of managing cane fields for greater longevity and productivity, and crop treatment systems that maximize the use of inputs produced by the Company's own units.
The investments were again concentrated in planting and treatment, partially offset by lower allocations to industrial maintenance. The costs resulted from higher plantation volume and largest cultivation area, impacted by the exchange rate changes in input costs.
Investments (R$ thousand) ¹ | 1Q21 | 1Q20 | % |
Expansion | 3,254 | 2,629 | 23.8% |
Operations | 236,137 | 232,860 | 1.4% |
Industrial | 11,361 | 3,675 | 209.1% |
Agriculture | 665 | 18,469 | -96.4% |
Planting | 115,596 | 112,048 | 3.2% |
Treatment | 106,114 | 92,216 | 15.1% |
Other | 2,401 | 6,451 | -62.8% |
Intercrop deferred costs | 3,413 | 22,210 | -84.6% |
CAPEX | 242,805 | 257,699 | -5.8% |
- 1Q20: Ex-NE cluster for comparion purposes.
4. EBITDA LESS CAPEX
EBITDA less CAPEX is presented in the table below:
(R$ thousand) ¹ | 1Q21 | 1Q20 | % |
EBITDA ex-resale/HACC | 369,138 | 339,095 | 8.9% |
CAPEX | 242,805 | 257,699 | -5.8% |
EBITDA ex-resale/HACC less CAPEX | 126,333 | 81,396 | 55.2% |
- Excluding the effect from IFRS16.
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5. DEBT
The Company's gross debt totaled R$7.8 billion as at June 30, 2020, an increase of 31.8% compared to June 30, 2019, mainly due to the effect from the 42.9% depreciation of the Brazilian real against the U.S. dollar on the dollar-denominated portion of its debt.
The balance of cash and short-term investments totaled R$429 million, out of which 55.7% was denominated in U.S. dollar. This variation reflects the Company's strategy to optimize sales by prioritizing products and periods that capture higher value added.
In view of the aforementioned factors, net debt totaled R$7.3 billion, an increase of 36.0% compared to the position as at June 30, 2019.
The following table presents a breakdown of the debt position:
Debt (R$ million) ¹ | 06/30/2020 | 06/30/2019 | Variation |
Gross debt | (7,762) | (5,891) | 31.8% |
Short term | (1,169) | (436) | 168.2% |
Long term | (6,593) | (5,455) | 20.9% |
Cash and short-term investments | 429 | 498 | -13.7% |
Net debt | (7,333) | (5,393) | 36.0% |
Adjusted EBITDA LTM | 2,141 | 1,704 | 25.7% |
Net debt/adjusted EBITDA LTM | 3.42x | 3.17x | 8.2% |
¹ LTM: last twelve months |
The following charts present a breakdown of debt by index and instrument as at June 30, 2020, as well as the cash position and short-term investments by currency:
The hedged position related to foreign currency indebtedness on June 30, 2020 was USD 252.5 million.
18
The following chart shows the cash position and debt amortization schedule:
19
6. CAPITAL MARKETS
At the closing of 1Q21, the Company's market capitalization totaled R$3.4 billion. Its stock performance in the last 12 months compared to Ibovespa is shown below:
Performance BSEV3 versus IBOV
Source: Bloomberg, June 30, 2020
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7. APPENDICES
7.1. IFRS16
The IFRS 16/CPC 06 (R2) Leases standard, adopted as of April 1, 2019, changed accounting for lease agreements and agricultural partnerships, which are now treated similarly to financing transactions related to the acquisition of 'right of use of assets,' and payments for which, previously recorded as operating costs and expenses, are now recognized as depreciation or amortization and financial expenses.
Before | IFRS16 | After | Before | IFRS16 | After | ||||||||||
Statement of Profit and Loss (R$ | IFRS16 | effects | IFRS16 | IFRS16 | effects | IFRS16 | |||||||||
thousand) | |||||||||||||||
1Q21 | 1Q20 | ||||||||||||||
GROSS REVENUE | 2,728,766 | - | 2,728,766 | 1,845,683 | - | 1,845,683 | |||||||||
Taxes and sales deductions | (59,140) | - | (59,140) | (127,319) | - | (127,319) | |||||||||
NET REVENUE | 2,669,626 | - | 2,669,626 | 1,718,364 | - | 1,718,364 | |||||||||
COGS | (2,297,420) | 38,966 | (2,258,454) | (1,513,659) | 26,031 | (1,487,628) | |||||||||
Depreciation and amortization | (329,540) | (118,703) | (448,243) | (312,968) | (117,376) | (430,344) | |||||||||
Raw materials | (388,420) | 156,995 | (231,425) | (373,024) | 142,036 | (230,988) | |||||||||
Industrial inputs and services | (46,567) | 674 | (45,893) | (33,030) | 1,371 | (31,659) | |||||||||
GROSS PROFIT | 372,206 | 38,966 | 411,172 | 204,705 | 26,031 | 230,736 | |||||||||
OPERATING INCOME (EXPENSES) | (185,677) | 57 | (185,620) | (217,896) | 59 | (217,837) | |||||||||
SG&A expenses | (154,724) | 57 | (154,667) | (109,296) | 59 | (109,237) | |||||||||
Depreciation and amortization | (5,021) | (485) | (5,506) | (5,282) | (529) | (5,811) | |||||||||
Other | (5,189) | 542 | (4,647) | (6,243) | 588 | (5,655) | |||||||||
Equity income (loss) in subsidiaries | (2,935) | - | (2,935) | (3,475) | - | (3,475) | |||||||||
Other operating income (expenses) | (28,018) | - | (28,018) | (105,125) | - | (105,125) | |||||||||
PROFIT (LOSS) BEFORE FINANCIAL | 186,530 | 39,022 | 225,552 | (13,191) | 26,090 | 12,899 | |||||||||
RESULT | |||||||||||||||
Net financial income (expenses) | (446,007) | (39,755) | (485,762) | (16,994) | (34,007) | (51,001) | |||||||||
Financial Income | 8,512 | - | 8,512 | 12,967 | - | 12,967 | |||||||||
Financial Expenses | (120,466) | (39,755) | (160,221) | (115,524) | (34,007) | (149,531) | |||||||||
Interest Expenses | (117,181) | (39,755) | (156,936) | (111,918) | (34,007) | (145,925) | |||||||||
Derivatives | 49,376 | - | 49,376 | 9,279 | - | 9,279 | |||||||||
FX Variation | (383,429) | - | (383,429) | 76,284 | - | 76,284 | |||||||||
PROFIT (LOSS) BEFORE TAXES ON | (259,478) | (732) | (260,210) | (30,185) | (7,917) | (38,102) | |||||||||
INCOME | |||||||||||||||
Income tax and social contribution | (21,330) | 249 | (21,081) | (133,484) | 2,692 | (130,792) | |||||||||
NET INCOME (LOSS) | (280,808) | (483) | (281,291) | (163,669) | (5,225) | (168,894) | |||||||||
21
7.2. Statement of Profit and Loss for the Period
Statement of Profit and Loss (R$ thousand) | 1Q21 | 1Q20 | % |
GROSS REVENUE | 2,728,766 | 1,845,683 | 47.8% |
Taxes and sales deductions | (59,140) | (127,319) | -53.5% |
NET REVENUE | 2,669,626 | 1,718,364 | 55.4% |
Cost of sales | (2,258,454) | (1,487,628) | 51.8% |
GROSS PROFIT | 411,172 | 230,736 | 78.2% |
OPERATING INCOME (EXPENSES) | (185,620) | (217,837) | -14.8% |
General and administrative | (73,717) | (73,988) | -0.4% |
Selling | (80,950) | (35,249) | 129.7% |
Equity income (loss) in subsidiaries | (2,935) | (3,475) | -15.5% |
Other operating income (expenses) | (28,018) | (105,125) | -73.3% |
PROFIT (LOSS) BEFORE FINANCIAL RESULT | 225,552 | 12,899 | 1648.6% |
Net financial income (expenses) | (485,762) | (51,001) | 852.5% |
Financial income | 8,512 | 12,967 | -34.4% |
Finance expenses | (160,221) | (149,531) | 7.1% |
Derivatives | 49,376 | 9,279 | 432.1% |
Exchange rate changes | (383,429) | 76,284 | -602.6% |
PROFIT (LOSS) BEFORE TAXATION | (260,210) | (38,102) | 582.9% |
Income tax and social contribution | (21,081) | (130,792) | -83.9% |
PROFIT (LOSS) FOR THE PERIOD | (281,291) | (168,894) | 66.5% |
22
7.3. Balance Sheet - Assets
ASSETS (RS thousand) | 06/30/2020 | 03/31/2020 | % |
CURRENT ASSETS | |||
Cash and cash equivalents | 359,383 | 1,174,943 | -69.4% |
Short-term investments | 69,858 | 52,245 | 33.7% |
Derivative financial instruments | 97,252 | 225,787 | -56.9% |
Trade receivables | 448,749 | 202,050 | 122.1% |
Inventories | 2,755,825 | 2,948,633 | -6.5% |
Biological assets | 775,238 | 663,908 | 16.8% |
Recoverable taxes | 153,299 | 158,777 | -3.5% |
Other receivables | 100,907 | 88,170 | 14.4% |
Assets held for sale | 37,777 | 45,165 | -16.4% |
Total current assets | 4,798,288 | 5,559,678 | -13.7% |
NON-CURRENT ASSETS | |||
Trade payables | 59,136 | 56,602 | 4.5% |
Escrow deposits | 383,113 | 385,413 | -0.6% |
Recoverable taxes | 82,003 | 57,529 | 42.5% |
Derivative financial instruments | - | 55,885 | -100.0% |
Deferred income tax and social contribution | 856,718 | 872,971 | -1.9% |
Other receivables | 319,104 | 320,012 | -0.3% |
Right to use leasehold assets | 1,588,562 | 1,577,379 | 0.7% |
Investments | 157,457 | 160,393 | -1.8% |
Property, plant and equipment | 3,266,705 | 3,477,391 | -6.1% |
Intangible assets | 920,138 | 921,964 | -0.2% |
Total non-current assets | 7,632,936 | 7,885,539 | -3.2% |
TOTAL ASSETS | 12,431,224 | 13,445,217 | -7.5% |
23
7.4. Balance Sheet - Liabilities and Equity
LIABILITIES AND EQUITY (R$ thousand) | 06/30/2020 | 03/31/2020 | % |
CURRENT LIABILITIES | |||
Borrowings and financing | 1,168,611 | 7,225,234 | -83.8% |
Liabilities from lease operations | 477,464 | 498,932 | -4.3% |
Advances from domestic customers | 140,694 | 28,128 | 400.2% |
Advances from foreign customers | 2,292,160 | 2,585,641 | -11.4% |
Trade payables | 690,168 | 798,903 | -13.6% |
Accrued payroll and related taxes | 110,115 | 90,483 | 21.7% |
Taxes payable | 69,442 | 75,152 | -7.6% |
Derivative financial instruments | 353,256 | 586,843 | -39.8% |
Other payables | 114,509 | 118,051 | -3.0% |
Total current liabilities | 5,416,419 | 12,007,367 | -54.9% |
NON-CURRENT LIABILITIES | |||
Borrowings and financing | 6,593,297 | 96,191 | 6754.4% |
Liabilities from lease operations | 1,215,719 | 1,182,337 | 2.8% |
Advances from foreign customers | - | 626,116 | -100.0% |
Trade payables | 4,857 | 5,965 | -18.6% |
Deferred income tax and social contribution | 36,383 | 36,883 | -1.4% |
Derivative financial instruments | 17,563 | 16,596 | 5.8% |
Provision for tax, labor, civil and environmental contingencies | 308,175 | 294,668 | 4.6% |
Taxes payable | 18,324 | 18,501 | -1.0% |
Other payables | 135,642 | 167,247 | -18.9% |
Total non-current liabilities | 8,329,960 | 2,444,504 | 240.8% |
EQUITY | |||
Paid-in capital | 6,077,674 | 6,077,674 | 0.0% |
Capital reserve | 1,353,937 | 1,353,937 | 0.0% |
Accumulated losses | (8,448,523) | (8,167,310) | 3.4% |
Other comprehensive income (loss) | (304,343) | (277,132) | 9.8% |
Total equity attributable to shareholders | (1,321,255) | (1,012,831) | 30.5% |
Non-controlling interest | 6,100 | 6,177 | -1.2% |
Total equity | (1,315,155) | (1,006,654) | 30.6% |
TOTAL LIABILITIES AND EQUITY | 12,431,224 | 13,445,217 | -7.5% |
24
7.5. Statement of Cash Flows
Cash Flows (R$ thousand) | 06/30/2020 | 06/30/2019 | % | |||||
CASH FLOW FROM OPERATING ACTIVITIES | ||||||||
Loss for the period | (281,291) | (168,894) | 66.5% | |||||
Non-cash transactions | 837,922 | 868,922 | -3.6% | |||||
Depreciation and amortization | 453,749 | 436,155 | 4.0% | |||||
Exchange, interest rate and commodities risk management | 162,191 | 174,662 | -7.1% | |||||
Losses (gains) in biological assets ¹ | (213,829) | (93,397) | 128.9% | |||||
Interest, exchange rate changes and inflation adjustments, net | 487,071 | 56,974 | 754.9% | |||||
Losses (gains) on hedge operations | (41,228) | 29,330 | -240.6% | |||||
Deferred income tax and social contribution | 29,770 | 133,575 | -77.7% | |||||
Other non-cash transactions | (39,802) | 131,623 | -130.2% | |||||
Decrease (increase) in assets | 244,540 | (1,323,910) | -118.5% | |||||
Increase (decrease) in liabilities | (1,346,573) | 340,758 | -495.2% | |||||
Interest paid on borrowings and financing | (89,809) | (157,889) | -43.1% | |||||
Net cash provided by (used in) operating activities | (635,211) | (441,013) | 44.0% | |||||
CASH FLOW FROM INVESTING ACTIVITIES | ||||||||
Decrease (increase) in short-term investments | (17,484) | 67,830 | -125.8% | |||||
Decrease (Increase) in provision for investment loss | 1 | - | 100.0% | |||||
Additions to lease agreements | (136,139) | (1,617,191) | -91.6% | |||||
Increase in property, plant and equipment | (117,123) | (95,124) | 23.1% | |||||
Additions to biological assets | (126,968) | (113,227) | 12.1% | |||||
Increase in intangible assets | (190) | (6,475) | -97.1% | |||||
Net cash provided by (used in) investing activities | (397,903) | (1,764,187) | -77.4% | |||||
CASH FLOW FROM FINANCING ACTIVITIES | ||||||||
Additions to lease liabilities | 136,170 | 1,617,191 | -91.6% | |||||
Payment of lease liabilities | 31,527 | (136,814) | -123.0% | |||||
Borrowings and financing | 859,770 | 1,912,948 | -55.1% | |||||
Payment of borrowings and financing | (778,384) | (1,921,867) | -59.5% | |||||
Net cash provided by (used in) financing activities | 249,083 | 1,471,458 | -83.1% | |||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (784,031) | (733,742) | 6.9% | |||||
Cash and cash equivalents at the beginning of the period | 1,174,943 | 1,189,112 | -1.2% | |||||
Cash and cash equivalents at the end of the period | 390,912 | 455,370 | -14.2% | |||||
- Losses (gains) from the fair value adjustment less estimated cost of sales of biological assets.
25
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Biosev SA published this content on 18 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 September 2020 07:24:01 UTC